How asset registers actually work
Key points in this article
- An asset register keeps track of all the fixed assets in a business
- Properly maintained registers mean you have the information instantly available
- The best registers are those that are kept up to date
Also known as a fixed asset register, an asset register is a record of all the fixed assets in your business. Fixed assets are those that your business uses frequently in order to create revenue. Examples of fixed assets include land, buildings, vehicles, equipment, machinery and computers.
An asset register keeps track of each asset’s:
- Name – use the asset’s formal name if possible or choose a descriptive name so that you can quickly identify it.
- Description – include serial numbers, Vehicle Identification Numbers, and other identifying details.
- Value and depreciation – the asset register tracks the asset’s value over time. You’ll want to keep track of what the asset was bought for, it’s original purchase price, the accumulated depreciation, and its current book value.
- Location – is this a permanent location or does the asset move between locations? If it moves, it may be helpful to include any alternate locations so you can find it quickly.
- Other details – such as purchase date, performance, ownership status, and accounting information (like depreciation method used and estimated useful life).
Asset registers are an important tool for small businesses, and are worth taking the time to set up and maintain.
Why you should use an asset register
An asset register can help you keep track of the value and status of every fixed asset your business has. The idea is to record every asset in one place so an owner, accountant, investor or advisor can quickly learn about a certain asset. It can be as simple as a spreadsheet containing asset details like names, purchase dates, and purchase prices. The asset register will become your primary record of all business assets, where you can track whether each asset is working or not, is still in your possession, or is on loan to another business.
At the end of the financial year, you’ll need to calculate depreciation for your assets as well as compile various year-end reports. Having everything in one place, complete with the numbers and details you need will make this process easier on you and your accountant.
Asset registers help you keep track of all your fixed assets, so you have the information at your fingertips.
Keeping your asset register current
An asset register is only as good as the information contained within it. Keep the asset register in an electronic format where it’s readily accessible and easy to update. Whenever you buy, sell, or move an asset, update the register. If you become aware of any new and relevant information about the asset, such as if it’s broken down, has become obsolete, has been written off, update the register.
Conduct quarterly asset stocktakes so you can be sure you still have the assets that are on your books. Again, take note of any obsolete or written-off assets in your possession and update each asset’s status and condition.
Your asset register is a living, constantly changing document that will help you keep track of your business’s fixed assets and make calculating depreciation each year easier, more accurate, and less stressful.