How Can You Use Fixed Asset Management To Beat The Tax Man At His Own Game?

Office managers all over the world are trying to strategise ways of reducing their expenditure on unnecessary overheads and expenses. One of the ways that you can reduce your tax liability is to properly asses and audit the current market value of your fixed assets and register the amount that’s been lost through depreciation.

Fixed Asset Management

However, if there’s any age to your business there’s a good chance that:

a) much of your equipment will be almost worthless on the open market yet you’re still paying too much in tax and insurance on it as it’s still appearing as an asset on your balance sheet and

b) records of when and for how much many of the assets you have throughout your company will be lost, mis-filed, thrown away or otherwise essentially useless.

There aren’t many companies that have the internal structure that would enable them to go through the records and consolidate that information, there are software solutions but that still involves carrying out a physical inventory of every piece of equipment, hardware, software and property that falls under the purview of your company.

It’s possible to outsource to service providers who offer a statistically sampled inventory but the results they provide are simply estimates, they may be rather more accurate than simply guessing “Meh, about fifty grand.” But they are still, nevertheless, estimates.

It’s Inventory Time

In order to be certain about the financial accuracy of your fixed asset inventory it’s necessary to conduct a wall to wall inventory and reconciliation. Giving your company a full audit is best practice to validate your data quality for asset management and the costs are quickly offset when put up against tax, insurance and overhead reductions.

What to Look for in a Fixed Asset Management System

When you’re hunting for a fixed asset management system or service provider if you’re going to outsource there a few things that every business should put on their shopping list:

• Accurate data which can be used for financial reports, asset tracking, compliance and property tax mitigation.
• Exorcise ‘ghost’ assets which can arise from poorly recorded asset wastage.
• Verify, correlate and consolidate the data which exists on your balance sheet.
• Validate data you record for GASB 34/35 compliance.
• Minimise tax liability
• Achieve an accurate financial assessment for the value of your assets for disposal.

In order to achieve a thorough ‘wall to wall’ audit of your fixed assets in what is known as a Fixed Asset Inventory and Reconciliation it is necessary to perform a complete asset inventory then reconcile that data against the financial records you have.

This provides a breakdown that is accurate enough to reduce your tax burden, confirm your asset records for depreciation and loss and also predict when property will be most economical to service or replace.

Making Life Easier in the Long Run

When your company undergoes its inventory implementing a barcode tracking system will make the job considerably easier the next time around, making valuing and asset tracking a much easier and less disruptive for you and your staff. It also means that you will achieve 100% consistency between what’s on the floor and what you have recorded in the balance sheets and ledgers. It’s probably been a long time since anyone’s gone around and actually looked at what you really do own and conducting this type of work ensures your inventory matches your finance reports.

Surveys have revealed that up to 65% of corporate asset information is ether inaccurate or incomplete, in some instances anything up to 30% of recorded property, hardware and equipment is no longer owned by the company.

About the Author: Dan Cash is a feature writer and former financial researcher currently looking into asset tracking and inventory management to limit tax exposure at work. Getting it right can save a fortune in overheads so why not look into the benefits yourself?

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