I would like to start this article off with a little story. First of all, I fly a lot to go and do what it is I do – I mean everywhere (love United frequent flier status – you are welcome for the plug) often chatting it up with my flight compadre next to me. Nine times out of ten we exchange our titles and ask each other what we do for a living. My conversation often goes like this:
Me: “I sure hope we take off on-time”
Compadre: “Me to, I’m on my way [insert home or work]”
Me: “What do you do?”
Compadre: “Oh I’m a [insert anything but a Fixed Asset Consultant]. How about you?”
Me: “I’m a Fixed Asset Consultant.”
Compadre – with a smirk: “fixed assets hu? Hahahhaaaaa!”
(depending on the personality of this person I either carry on the funny nuances of the words fixed assets or I move on)
Me: “Yes, I play on those words as much as I can. You’re funny.”
Compadre: “All joking aside, really, what is a fixed asset?”
Which leads me to discover that after 13 years of implementing fixed asset management solutions and writing workflow procedures for over 300+ companies (of all sizes), people still don’t know what a fixed asset really is or why they should care. Sometimes, even those who take care of fixed assets.
So, what is a fixed asset? A fixed asset is really just a tangible asset like: land, buildings, office equipment, computer equipment, furniture & fixtures, vehicles and machinery / manufacturing equipment. Every company or organization has them. Then, they depreciate and based on what type of asset it is (personal or real), they depreciate on different schedules and methods. Tax has different rules and regulations than GAAP. If you are non-profit or government, tax is taken out of the equation.
Why are they important you ask? Don’t get me started. Fixed assets help your business grow or assist in creating your product or service. Mis-managing fixed assets brings a whole slue of problems like overpaying on insurance premiums or even worse… TAXES, you often end up with a higher total cost of ownership, RISK of non-compliance, missing out on income tax deductions and more (internal theft also comes to mind).
In a nutshell, if you don’t know what a fixed asset is and you don’t manage them properly you could be missing out on deductions for your business to keep growing! These days, no one wants to go out of business or lay anyone off. Pay attention to what you have – you could be doing your business a disservice!
I’m off to purchase another ticket to my next United destination to dedicate myself to more fixed assets! Later.