In this article, we’ll tackle everything you need know about asset tracking, its importance and ways on how you can start tracking your company’s resources.
Why Asset Tracking is Important?
There are many reasons on why keeping an eye out for your assets is essential when it comes to business.
For compliance reasons, most companies wanted to exceed the highest of standards, and in order to achieve this, businesses would often apply for industry certifications, and comply with requirements which involves cleanliness and organization of resources.
Business-wise, it’s company money that you’ve invested for those assets, and a damaged or stolen piece means liability to your company, since those assets are mainly used for internal business operations.
For the accounting part, tracking assets is important because of income taxes, especially when it comes to depreciation. The more the value of an asset decreases every year, the more it lessens the amount of taxes to be paid.
IRS’ Take on Depreciation
According to an article by the Internal Revenue Service, in order for taxpayers to be allowed for deduction (as per depreciation), they had to comply with the following requirements:
- The taxpayer must own the property
- The property should be used for business purposes only
- Property should have determinable useful life of more than 12 months (1 year)
Differentiating Your Assets
Assets in your chart of accounts can be divided into two main categories, namely: liquid assets (which is cash on hand), whose examples are accounts receivable, deposit account funds, bonds, mutual funds and many other assets that can easily be converted into cash.
Fixed assets, on the other hand, are those assets that are tangible and are designed for long-term use. In layman’s terms, these kinds of assets unlike those in the liquid side, cannot be converted that quickly into cash. Best examples of this are land, buildings, fixtures, vehicles, computers, and many other types of business equipment.
Know What to Track
First things first: You need to figure out what assets in your company would need some tracking. The best way to do it is by assignment of asset to employees. We all know that resources such as gadgets and devices are expensive, and would become a terrible loss if not handled well. This way, you could easily track improper use of equipment, and identify which person is in charge of the device.
Here are some of the other useful methods on how you can easily manage assets in your company:
a. Barcodes – With this method, a unique code will be assigned to each asset. This would allow you to track and identify which of your resources has been lost or damaged. It can also help you especially when it comes to organizing your assets in storage facilities. Before, barcode readers are used to identify these symbols, but as technology progresses, people can now use their smartphones as scanners for these codes.
b. RFID – also known as Radio-Frequency Identification, RFID can be used to read the information stored in an asset. An RFID tag contains a chip and a transmitter which makes tracking of assets a lot more easier.
c. By Software – Most applications nowadays are also offering ways on how one could track assets. Xero accounting software for example allows users to record details of their fixed asset such as Asset Name, Number, Purchase Date and Price.
Not only that, Xero also allows users to manage depreciation and disposal of fixed assets as well as import multiple assetsinto Xero in bulk, making it a lot easier to manage lists of business resources. Visit Xero’s website to learn more on how you can manage your fixed assets using the accounting software.
With the newest technologies existing today, there are actually plenty of methods that you could use on keeping track of your business assets. Please take note that since every business has its own unique workflow, you need to choose on what works best for your business.