Fixed Asset for Small Business

Please note that this page contains affiliate links. While we only recommend products that we believe in, we may benefit financially from any purchases you make.
Computer laptop fixed asset

The definition of Fixed Asset (FA) is an asset that the business owns and will have a remaining life of over one year. They appear on the accounts as part of the balance sheet.

If your business is a limited company, you are legally required to keep a record of all your equipment in a fixed asset register. It can be a simple spreadsheet or a list in a notebook or if you have lots, you may need to use a software package.

Our free Excel Depreciation Schedule is a fixed asset register that calculates your depreciation. We also have a quick depreciation calculator, which will calculate the depreciation using the straight-line depreciation or reducing balance over a given period.

What are fixed assets?

There are two types of assets:

Tangible Assets

These are the most common assets that a business may own and include the following: Cars, machinery, computers (including laptops), buildings, furniture, and fittings. Tangible assets are shown in the business balance sheet at cost price, and then depreciation is calculated to reduce the balance. To learn more about depreciation and how to calculate depreciation, look at our depreciation accounting section.

Intangible Assets

Intangible assets do not have to be physical items but include goodwill, brands, patents, trademarks, and licences. They can be challenging to put a value on, but these assets can account for a large proportion of the business’s assets, especially if it is a large organisation with a well-known brand.

Investments

These will only be included in the accounts if the business has invested in a long-term investment and may consist of a joint venture or purchasing a stake in a different company.

Examples of Fixed Assets

Fixed assets are long-term tangible property that a company owns and uses to generate income. These assets are not expected to be consumed or converted into cash within one year. Here are some examples of fixed assets in small businesses:

  • Vehicles: Cars, trucks, and vans used for deliveries or transportation.
  • Machinery and Equipment: Computers, printers, manufacturing equipment, tools, etc.
  • Furniture and Fixtures: Desks, chairs, shelves, display cases, etc.
  • Buildings and Land: Office spaces, warehouses, retail stores, manufacturing facilities.
  • Leasehold Improvements: Renovations or upgrades made to a leased property.

Fixed Asset Accounting

Asset Accounting can be complicated; it may be worth speaking to your accountant to find the best way for your business to calculate the costs.

If you have a fixed asset that has been sold or withdrawn from use, you will need to calculate the disposal of fixed assets figure and post it to the accounts.

Tangible Assets are usually calculated by taking the purchase value of the item and reducing it by depreciation over time. An example is when a small business purchases a computer for 600. They depreciate the computer over three years; therefore, the depreciation will be 200 per year.

Download our free depreciation schedule Microsoft Excel template for your fixed asset schedule.

Intangible Assets are more complex to value as they have no fixed costs.

Fixed Asset Software

There are several choices for Asset software packages. If you already have an accounting package, check to see if it includes Fixed Assets. Most paid software packages include it. Xero allows you to set up a fixed asset register and calculate the depreciation.

If you are a larger company and need to track and value FA’s, some software packages are available.

Fixed Asset tracking

There are several ways to complete fixed asset tracking. As a one-man band, you will know where the equipment is. If you have a couple of employees, giving each piece of equipment a sticker with a unique number may be worth giving each piece of equipment.

A larger company may have many assets, making it worth investing in fixed asset tags or labels. Some of these will include a barcode, which can be read with a barcode reader, and the equipment will then be identified.

We have written a short guide on barcode asset tracking; this explains how barcodes and scanners can work with all your assets.

Return from fixed asset tthe o bookkeeping basics page.