Business assets, such as computers, office furniture, and other equipment necessary to run a company, all add value to your business. These physical assets make up a large portion of your company’s value so it’s important to make sure you manage your business assets the right way.
Identify Your Assets
Make a list of all assets you have for your business, including:
- Office furniture and fixtures
- Computers
- Special technology
- Company vehicles
- Inventory
Assign Value to Your Assets
Determine the market value for each asset. Keep in mind that the market value isn’t what you initially paid because assets depreciate. To determine the market value of each asset, it’s best to do some research by looking for similar products for sale to give you a ballpark figure of what each asset is worth. Be sure to record the value of each asset on a balance sheet and update it every so often.
Protecting Your Assets
Taking the steps to protect your assets helps minimize potential risks to your business. Here are a few ways to protect your business assets:
Apply for LLC: Putting your company in a Limited Liability Company (LLC) is critical to protecting your assets from becoming exposed to potential claims.
Insurance: Having the right level of insurance for your assets will protect against operating losses if machinery breaks and ensure that any claims against you go through your insurance and not your business.
Patenting Business Knowledge: If you are a small business owner, you are probably the heart and soul of your business and hold an immense amount of knowledge within your expertise. Documenting and patenting that knowledge is a way of protecting that intangible asset.
Understand Your Assets and Taxes
Knowing what kind of depreciation deduction you can take for your business assets will help you during tax season. According to the IRS, you can write off the depreciation over the asset’s useful life; however, once that asset isn’t used, you can’t continue to write it off.
Leverage Your Assets
If you decide to take out a loan or sell your business, the value of your assets can help you. Your assets, including your revenues, trademarks, and patents are all factors in the valuation of your company. This will help potential investors determine how much to offer in exchange for equity as well as help buyers offer a fair amount to buy the company.
It’s obvious that managing business assets is essential to owning a company. Once you establish these processes, you will feel more at ease as a business owner and when you purchase new assets, you’ll know exactly what to do.
