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Managing Your Assets

By: John Hivern

Assets constitute of two major components - cash and physical assets. While asset management is a fairly easy task, most of us - especially those who own small businesses - do not pay much heed to this essential task. The necessity of good practice dawns on us only when the tax season is round the corner.

Healthy habits with regards to book keeping and accounting practices will always save you time and money in the long run. When dealing with your cash accounts and assets, you need to keep exact track of income and spending - irrespective of how small or insignificant the dollar value may be. Every cent added up over a period of time can make a vast sum.

Asset management and proper accounting practices are especially important when it comes to paying taxes to the government. Something may seem minor to you, but you don't want to learn the hard way, as even a tiny indiscretion may turn up in an audit. This can happen to you years later than the actual event.

Exact and detailed accounting books will also help you should you need to apply for a loan or a small business grant. They will need to know all of your assets and if you have all the proper documentation, and books with accurate records, you will be able to easily prove you are a reliable member of the business community.

With time, most small business establishments acquire physical assets that they start overlooking when calculating their total asset. An asset is anything that holds some sort of monetary value or can be sold - irrespective of size or vintage. While we all know that the computer we work on is an asset, most of us fail to include items of furniture such as the chair we sit on and the desk we use. A considered glance with a critical eye would bring to light many more items that were not originally thought of as assets.

Reporting and managing your physical assets consists of several events. One of these is depreciation. You can easily understand depreciation when you think about a car. You already know that if you bought a car in 2000 for $15,000, you won't be able to sell it for that much in 2005. In fact, the first time you drive it, the value decreases. That's what depreciation is. Other things may decrease its value, such as mileage, wear and tear, and accidents. Everything except property is an asset subject to depreciation. Property usually increases in value over time.

Office equipment and most other equipment purchased for a small business does follow the deprecation rule and must be taken into account when you are recording your assets. You may be feeling confused and overwhelmed at this point, but asset management can be fairly easy, given the proper tools.

There are several types of software programs available that can help you with your asset management and book keeping. Most software is fairly user friendly and comes with good documentation so you can set it up specifically for your business with ease. If you would rather hand your asset management and accounting over to someone else entirely, you may want to consider consulting a chartered accountant.

The key to staying on top of things is to take the task of asset management and book keeping with the intensity and seriousness it deserves. Not only can small businesses benefit from properly documenting their assets, but there can be serious repercussions if they do not. Correct asset management practices is an absolute essential.

Article Source: Main Articles

John Hivern is the owner of FTP Assets, a fantastic resource for information about Asset Management & Protection. For more articles on Asset Management & Protection why not visit: www.ftpasset.com/articles
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