Assets Uncovered

What Exactly Is an Asset?

Simply put, an asset is something valuable your business owns or controls that can help generate income or support your operations. Assets are the foundation of your company’s financial strength.

Think of assets as anything that adds value to your business, including:

• Current assets: Cash, accounts receivable (money customers owe you), and inventory you can quickly convert to cash within a year.
• Fixed assets: Long-term property like equipment, buildings, and vehicles.
• Intangible assets: Non-physical items such as patents, trademarks, or brand reputation.
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Understanding the difference between these helps you see where your business’s value lies and how to manage resources wisely.

Practical Example: Jose’s Landscaping

Jose request help from his bookkeeper to categorize his different assets. Examples of Jose’s current assets are income he has earned (cash)  and income he is owed for work performed (accounts receivable). Categorizing these different current assets is important to differentiate between having cash to meet immediate obligations and money that is owed to Jose at a later date for work completed. If money earned and money owed is summed up together, Jose may mistakenly take on financial obligations based upon misinformation due to inadequate categorization. 

A landscaping business relies on utilizing fixed assets, which may last more than a year, such as lawnmowers, weed eaters, trailers, tools, and trucks. Differentiating and categorizing fixed assets can help Jose decide how to depreciate the value of different equipment and vehicles, due to equipment losing value after use and therefore, lowering Jose’s tax liability. A bookkeeper can help a client determine the optimal depreciation method for a fixed asset. 

Perhaps, the most difficult assets to obtain are intangible assets. Jose has yet to earn a reputation in the area as a landscaper, however, if Jose earns and maintains his customer relationships, the intangible asset of goodwill will increase the value and reputation of his landscaping business. 

Ready to Take Control of Your Assets?

Understanding assets is the first step toward mastering your business finances. If you want expert help tracking your assets and keeping your books accurate, our dedicated bookkeeping team is here for you.

Contact us today for personalized support that keeps your business running smoothly and growing strong.