Small Busines Bookkeeping Tip #7 Tracking Fixed Assets

When you track fixed assets there are some bits of information you need to retain and some decisions to make. Here’s some questions you should ask ..

1. What did you purchase?
2. Where did you purchase it?
3. When did you start using it?
4. How much did it cost?
5. Accumulated depreciation?
6. Fixed asset or expense?

The big question is “when should you capitalize an item into the business so that it becomes an asset of the business?” This is a decision that your accountant can help you with. He/she can discuss with you whether the asset can be depreciated to your advantage, and whether or not business property taxes may be levied against it.. (this is a tax which is often assessed at the county level and should be a consideration along with an appropriate depreciation method). If you decide not to capitalize, then the item’s cost should be expensed. Examples of items that are often fixed assets of businesses are autos, trucks, and large equipment purchases.

Advertisement