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What are Assets and Why Should I Track Them?

Assets. Inventory. There can be a lot of confusion with these two terms. The office manager wants to keep an inventory of the assets. The accountant wants to count the inventory as assets for tax purposes. So which is which and how do you track them? Every company has assets. An asset is any item that a business uses internally, such as office equipment, tools, software, etc. This differs from inventory, which are items a company sells or consumes, like office supplies or business cards. When you track inventory, basically you know how many of each product you have on hand, how many you have sold, and how many you have on order. There is a flow of items in and out of your warehouse. On the other hand, assets typically are fixed items that you use for a long period of time. You need to know the details of each specific fixed asset, such as who has it, what is it worth, when was it last serviced or repaired, when does the warranty run out, etc. Why should you track your fixed assets? It is very easy for assets to get borrowed and misplaced. If you have mobile workers or a steady employee turnover rate, assets can get lost even faster. A company can lose thousands of dollars every year searching for and replacing missing assets. With an asset tracking system, you know where the asset is, if it's been checked out to an employee, and when it's due back. You can also keep maintenance logs on your assets so that you know that they are being properly maintained and can schedule the service. Keeping track of software licenses can ensure that you fully utilize the licenses that you have and make sure the users get all the necessary patches and upgrades. Asset tracking software can keep track of your assets' value and depreciation, which is extremely helpful at tax time.