What Are Fixed Assets and Why Should I Acquire Them?
You may have heard the term, "Fixed Assets," before, especially in conjunction with the general ledger or the balance sheet for your accounting needs. Fixed assets are items such as property, equipment, or plants. These assets are those that cannot be easily liquidated should you need cash. Fixed assets include:
- Land and buildings
- Office equipment
- Furniture & Fixtures
Fixed assets depreciate (lose value) over time. This depreciation creates some tax benefits. A fixed-asset is something a company plans to hold for the long-term, to use for business growth and production. You will need at least some fixed assets in order to run your business. There are several different methods for the acquisition of fixed assets. These include:
- Purchasing the Asset Outright
- Long-Term Financing
- Short-Term Financing
- Capital Lease
You should acquire what you need when you need it. For example, when you start or grow your business, you will probably purchase many fixed assets. If you are going to start a graphic design company, you might purchase a computer, software, scanner, quality printer, etc. If you are going to start a construction business, you will purchase the equipment required for that. Fixed assets will differ between industries. Keep track of all business purchases made.