Protecting Your Business Assets

If you have a business, you have business assets. To protect your business assets, you first need to know exactly what business assets you have. Business assets include anything you use to run your business. Calculators, copiers, furniture, shelving, cabinets, chairs, desks, and especially specialized equipment like saws, assembly equipment, tools and other items.

For accounting purposes, you will need to capture each of these items as you purchase them and then record them in your financial statements to track depreciation – the reduction in value of an item as time passes and the item is used – and disposition. Your accountant will recommend a method for accounting for your business assets and the depreciation of these assets. To determine the value and depreciation or useful life of a business asset you wish to sell, you first have to determine how you acquired the asset. You have to start with the cost of the purchase to figure the gain or loss from sale, scrap or disposition. If you inherited the business asset or if it was a gift, you’ll need to establish some other basis of cost and value. The adjusted basis of your business asset is the original cost or calculated value plus improvements or other changes in value, minus deduction for depreciation and losses or damage. 

Your business planning should include a timetable for when these items should be replaced and when you plan to purchase additional business assets. The timing of these purchases depends, of course, on your cash flow but since the purchase or replacement of these assets may also hamper or support your business growth, you need to know how you will pay for these items at or before the time you need them.

If you are leasing any of your business assets, your accounting, financial and business plans must include renewal of leases or purchase of these assets at some point.  

In most states, you will have to file a form when you sell or dispose of your business assets. Remember that exchange or sale or business assets may be taxable. Look to your accountant or business manager to find out if you need to pay taxes or file forms when you transfer or dispose of business assets.  

Finally, be sure you tag all your business assets to protect you from theft and allow you to more easily log and track the business asset. While you may have a two room office right now, as your business grows it will become more difficult to track and protect your assets if you have not established a business asset tagging and tracking system.