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Managing Your Assets

By: John Hivern

If you're a small business owner, you probably know by now how important it is to efficiently manage your assets. This fact is most evident at tax time each year. Whether you're talking about cash or other physical assets, managing them doesn't have to be difficult.

The first rule to follow is to have good bookkeeping and accounting practices in place. In the long run doing this will save you both time and money. No matter how insignificant the amounts may seem, be sure to account for every penny that comes in and goes out. Even a few cents here and there can end up adding up to hundreds of dollars.

Following of a good accounting practice and asset management is extremely important, especially when you are required to submit tax to the government. There are numerous cases where small issues that appear insignificant come under the eye of scrutiny and can haunt you for years with the IRS on your back.

Good record keeping will also benefit you any time you need to apply for a loan or grant. You will have to know each of your assets and provide documentation and accurate records. Besides securing the loan, these practices will also identify you as a responsible member of the business community.

As for physical assets some small businesses may not realize just how many assets they actually have. Anything that holds some sort of monetary value, or can be sold, is considered an asset. For example, you probably know that any computer equipment is an asset. However, many people overlook the chair they're sitting in, and desk their computer is on, as an asset as well. You should be looking around to see how many more assets you have than you had originally thought.

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.

Other tools of the trade in any small business are generally considered assets, and will depreciate in value. An example is office equipment. All assets must be recorded. If all of this sounds confusing, don't despair, as there are tools available to help you manage your assets.

Now that we're in the computer age, there are a number of software programs to help with asset management and bookkeeping. Most of the software is easy to use and is well documented. You should be able to tailor it specifically to your business. If you'd rather outsource these functions, think about talking to a chartered accountant.

The bottom line is that for small businesses, asset management is very important and must be taken seriously. Not only can you benefit from properly documenting your assets, but there can be serious repercussions if you don't.

Article Source: http://articleaddict.com

John Hivern is the chief editor for FTP Assets, the web's premier resource for information about Asset Management & Protection, For more articles on Asset Management & Protection visit: www.ftpasset.com/articles
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