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Updated Oct 2023
The Benefits of a Fixed Asset Register and Asset Tracking
The importance of maintaining an accurate fixed asset register, asset information management and asset tracking is sometimes overlooked by small business. Keeping an up to date and accurate fixed asset register not only assists with ensuring compliance is correctly reported but it can play a very valuable role in assisting businesses with short- and long-term planning for their business assets, including digital assets and intangible assets. In addition, it is important to maintain a fixed asset register as it allows businesses to keep track of the book value of assets, their depreciation over time, and their asset location including their purchase date and purchase cost at multiple locations.
What Is a Fixed Asset Register?
A fixed asset register is an item listing of all fixed assets owned by the business which can include details such as what the assets are, where it is located, purchase price and date, useful life of the asset within the business and expected value at the end of its useful life and is used to summarise both accounting and deductible taxation depreciation expense and asset information.
It may take the form of a simple Excel worksheet or be integrated with accounting or asset management software. Whatever the form, having all the numbers you will need to calculate depreciation and end-of-year reports will simplify this task.
Most small business owners don’t review or spare a thought for the assets being listed in their asset registers and just leave it to their accountants to ensure that they are compliant for tax. However, an asset register can serve other use purposes aside from ensuring compliance records are maintained.
Advantages of maintaining an accurate and up-to-date fixed asset register for your business assets
Assets are fundamentally what businesses use to derive income, meet debt, retain customers/clients and grow wealth. Fixed assets include land, buildings, machines, office furniture, office equipment, and company vehicles, as well as digital assets, and effective and efficient fixed asset management will contribute to the ongoing success of any business. Additionally, it can play a crucial role in preventing the company’s losses.
There are many reasons why the asset register is a useful control tool for fixed assets:
- Keep record and track of the value and status of each asset your business owns
- Simplify the calculation of annual depreciation
- Forecasting profits and cash flow regarding maintenance of assets, upgrading assets and replacement of assets, and asset location.
- In order to obtain finance or at least the most finance possible to grow your business, financiers will generally require an up to date assets register
- Used as a tool to stay on top of and try to prevent theft of assets
- Succession/business exit planning and determining your business true value
Rarely will business owners be able to list every fixed asset they hold and their written down value especially the small ones, nor is there a need to, provided a fixed assets register and comprehensive asset information are maintained. It is encouraged to review registers on an annual basis as a minimum to ensure they are reporting their assets accurately, maximising their deductions as far as obsolete or scrapped assets, tracking assets, and maximising their business valuation.
Are you managing your assets in the dark?
You might be missing out on opportunities of improving the accounting profit of your business.
We have seen many business owners face challenges to maintain their fixed asset register before working with us. Most of them know the importance and potential benefits, yet, without expertise, a fixed asset register can be complex.
If you find yourself in this situation, please do not waste your time! We are certified business advisors and accountants with extensive experience in assisting small businesses.
Whether you have questions about your Fixed Asset Register or need guidance, don’t hesitate to reach out to us. You must unlock the full potential of your assets and improve your business’s financial performance. You can start by booking a free, no-obligation consultation with our business advisors, John or Shaun. Click the links to book in your spot!
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