ACCOUNTNG 101: The importance of maintaining a fixed asset register
As a business owner, do you have an accurate view of all your business assets and can you easily determine which of these assets are improving your profit-making capabilities? If not, maintaining a fixed asset register may be key to the success of your business.
A fixed asset register is a detailed listing of all your business assets and allows you to keep record of the status, procurement date, location, price, depreciation, and current value of each asset. This is especially important if your business relies on its assets for profit-making purposes.
Many small- to medium-sized businesses neglect to maintain this crucial financial document. Not only does this impact your bottom line, but it leads to other difficulties, including:
- Inaccurate financial records;
- The potential accumulation of costly “ghost” or “zombie” assets;
- Lack of understanding of asset priority;
- Job delays through lack of spare part visibility;
- Limited view of asset life cycle (acquisitions and disposals); and
- High asset maintenance costs and unplanned downtime.
The benefits of maintaining an accurate fixed asset register greatly outweigh the perceived time and admin costs spent to build and regularly update the register. These include, but are not limited to:
- Providing complete transparency of all asset data;
- Ensuring all assets remain compliant with regulatory requirements;
- Providing an accurate audit trail;
- Helping to track and identify assets;
- Preventing assets from being lost or stolen with accurate location data;
- Allowing for accurate depreciation calculations;
- Forecasting maintenance and repair costs, or other large expenses;
- Determining the timing of asset retirement and new acquisitions; and
- Budgeting more effectively using asset performance and cost data.
Not sure how to create this financial document or what information should be included in it? Feel free to contact your BAN accountant, as it can make a vast difference to the growth of your business.
DID YOU KNOW?
The new Two-Pot Retirement System applicable to all retirement funds in South Africa has been implemented on 1 September 2024.
Look out for the next edition of the BAN Buzz for a brief overview of what this system entails and how it will affect you.
TOP TIP
SARS has recently placed focus on fighting against “ghost” tax practitioners. These are tax practitioners that are not registered on the system and often engage in fraudulent practices.
Per Keith Engel, CEO of the South African Institute of Taxation (SAIT): “Many of what we call “ghost” tax preparers promise refunds, charge a fee and then disappear. If SARS then audits the taxpayers’ cases, they demand that the money be repaid. The taxpayer can also incur penalties.”
It is recommended that taxpayers be vigilant about their tax affairs, even with a tax practitioner involved. SAIT suggests the following checks to ensure that your tax practitioner is above board:
Check registration – Ensure that your tax practitioner is duly registered with SARS and a recognised controlling body and that they are in good standing with both.
Request proof of compliance – Ask your practitioner to provide evidence of their overall compliance status.
