How Do Small Business Track Their Assets ?

Most small business owners can attest that there is a lot more to the “business” side of things than they might have originally expected. Selling donuts, handmade crafts, software, or anything else requires stringent accounting, so as to remain both legally compliant and economically sound. One often overlooked aspect of this is the tracking of fixed assets.

Because, let’s face it: Asset tracking can be rather tedious, boring, and confusing. If you’re unfamiliar with the concept of asset tracking, you’re not alone.

Financial statements continue to use the original cost of an asset, rather than the current market value of it, even though that asset’s usefulness declines as time goes on. (You wouldn’t pay the same amount for a used toaster as you would a new one, right?) In order to understand the true value of your assets over time, you need to track them.

So what do small businesses use to track their assets? let’s examine the most commonly used methods for calculating the depreciation of assets, among other tasks, and see what’s the most effective and efficient.

NO ASSET TRACKING

There are a few problems with not tracking asset at all, however:

1. Basic Disorganization

What’s an asset and what isn’t? What’s due for maintenance, or for disposal? What assets were recently checked out and are now missing, potentially misplaced or even stolen by employees? Lots of questions arise when a business has no system for tracking their assets, and the mostly costly of these issues is when ghost assets appear

2. Ghost Asset

When an asset appears on the ledger but can’t be found in real life, that’s a ghost asset. This can happen as a result of assets being rendered unusable, or going missing, or never being purchased in the first place but marked as such due to an accounting error. At a basic level, this is a problem because if you assume you had a tool on hand ready for a job and suddenly it’s not there, you can’t do your job. But extraneous assets till count towards the company’s tax and insurance liability—which means some companies end up overpaying their taxes up to 20 percent.

MANUAL PROCESS

This very, very old school way of tracking assets is laughably out of date. First of all, the number of accounting errors you set your team up for by using a pen and paper is likely astronomical: Humans make mistakes, and one misplaced zero or decimal point could be the difference between paying hundreds or thousands in taxes on an asset. Secondly, in this highly automated world we live in, continuing to use manual processes for accounting means you’re spending tens or even hundreds of hours each month and year doing something that could be done instantaneously by a computer.

Some small businesses are small enough that they feel they can easily account for all their assets without help. But what happens when you want to grow, to scale up? Having that system in place ahead of time makes scaling up much easier than growing, then realizing you are in over your head and need to backtrack.

ASSET TRACKING SOFTWARE OR SYSTEM

In a world where machines, software, and systems are becoming increasingly common, it’s a surprise this number isn’t higher—though we’d expect it to continue rising in the years to come.Automated asset systems are an investment, but the number of manual hours they shave off the asset tracking and auditing process is priceless. By equipping employees with tools like barcode scanners or mobile computers, companies can make check-in and check-out of assets, asset auditing, and maintenance scheduling a matter of scanning a barcode. Many systems can do automatic depreciation for you, allowing you to buy an asset, set its depreciation, and use it until it’s time for disposal.

The best part—which is what makes automated systems an upgrade over using accounting software or spreadsheets—is how your asset database is updated in real-time. Make a change to the asset ledger in one part of the office, warehouse, or world, and you’ll see that change immediately everywhere else.

Another benefit is the digital, easy-to-follow “paper” trail that an asset system leaves behind. No misplaced papers or deleted spreadsheets, so if there is an IRS audit, you have everything you need to back up your case.

At this point, it’s best to just upgrade to an automated system to avoid the headaches. One such Asset Tracking & Management Software is offered by Omega-Cst, a Software Development Company based in UAE. Our Asset Tracking And Management Software named MaxAssets, cover each aspect that will help you better manage your Assets without worrying.