If you’re new to the world of business, chances are you’ve already been met with terms that you might not fully understand. However, as a business owner, it’s essential to get to grips with these terms in order to improve your understanding and your positioning in the industry. Business Assets are just one term that, while many of us have a general understanding of, some might not understand in its entirety, and that’s OK! In business, knowing what assets are and what assets you own is crucial to ensuring you are properly valuing your business and that you are effectively protecting them. So what are they, and how do you go about ensuring they’re kept safe? We’re answering these questions, below.
What Are Business Assets?
Business assets are, at their core, simply something that your business owns. Typically, these things will be of value in some way and therefore provide your business with additional overall value. Assets can produce goods or services, or fund operations within the business itself, and could be anything from a building or materials, to a machine, computer, stock or even intellectual property. If it is owned and used by your business and used primarily for use within that business, it will be considered a business asset.
How Do They Work?
Generally speaking, assets are used to add to the overall value of your business. They can either be used as a way to produce value or can be sold to produce value if needed in the short or long term. Asset accounts are a key aspect of any business balance sheet and are often considered as important as liabilities and stockholders’ equity. Your business could have:
- Current Assets – Current assets include money that a client owes you, so would include active invoices. (e.g. cash, invoices, receivables, securities, stock, pre-paid bills)
- Fixed Assets – Fixed assets are the physical things, such as the building that you work from, equipment that you own or even the business-specific vehicle that you use. (e.g. machinery and plant, commercial buildings, vehicles, office contents, and equipment such as computers)
- Tangible Assets – These are the physical things that your business owns that are typically measurable and could be damaged. In other words, they are the material resources. (e.g. vehicles, retail stock, materials)
- Intangible Assets – Intangible assets include any intellectual property the business owns, such as trademarks and licences. (e.g. trademarks, licences, patents, copyrights, trade secrets, goodwill, franchises)
An asset list could include anything from cash and inventory to marketable securities, accounts receivable and goodwill. They are usually listed at historical cost, so you won’t need to determine the current market value, though an appraiser can help you work out the overall amount you might get if those assets were liquidated.
What Criteria Would An Asset Need To Fit?
The criteria that any asset would need to fit in order to be considered an asset includes:
- Who Owns The Asset – Your business needs to be the owner of the item. A personal item will not be considered a business asset. It has to be owned and controlled by the business, and if any other party could have control or try and sell it, it likely won’t be counted.
- Resource – The asset must have the potential to offer value in the future in order to be considered. This could be machinery that helps produce stock, a laptop that manages the operations, intellectual property that protects your business and generates value that way, or invoices for customers due to pay their owed costs.
- Economic Value – Every asset has to have some level of monetary value. Typically, this is cash, but in some cases, general value as a resource may be considered.
How Do I Protect My Business Assets?
Protecting your assets is unlikely to occur with one move – you’ll need to consider a few different measures to truly protect your business and everything that it owns. Protection can range from:
- Business Insurance – Depending on the nature of your business, there are a number of business insurance policies available that can protect your assets. Even a public liability insurance claim protects your business’s financial assets by providing financial aid in the case of legal matters. Ashburnham Insurance can help you find the right policies for your business and industry.
- Trademarks and Copyright – By trademarking and copyrighting your business and its assets, including stock, trade secrets and more, you can reduce the chance of fraud and theft.
- NDAs – If your business has valuable intellectual property, you might find that NDAs amongst your staff could offer additional protection. It can help protect trade secrets, recipes, business changes, cash flow and more.
- CCTV, Security Systems – CCTV and high-security systems can help protect your physical assets by deterring theft and providing proper surveillance in cases of malicious damage. Security systems can also ensure that any perpetrators are caught or apprehended before any theft could take place.
There are plenty of things you can do to improve the security and protection of your business assets. Insurance offers you a financial safety net in cases where things might go wrong, protecting your business in case of claims that need to be made. For more information, get in touch with a member of Ashburnham Insurance on 0800 1696137.