One big piece of your year-end reporting preparations is calculating fixed asset depreciation. Depreciation errors can cause financial reports to be incorrect and run the risk of failing to comply with regulatory requirements. Incorrect calculations can also result in overpayment of property taxes and insurance and failing to take the most advantage of larger tax savings.
Fixed assets represent a significant investment for most businesses. Mismanagement of these assets can result in severely negative consequences including major penalties. At the same time, managing assets effectively can be time consuming and overwhelming. Using Fixed Assets management software, like Sage FAS, you can simplify fixed assets tracking and improve the reliability of your accounting.
Improve depreciation calculations and financial reporting
One of the most important features of a fixed assets management system is the calculation of depreciation. The U.S. government imposes a number of financial reporting requirements and strict penalties for non-compliance. CEOs and CFOs of public companies must personally certify the integrity of their financial reports. While this only applies to publicly traded companies, many private and non-profit companies have adopted these methods in an effort to provide their financial partners, board members, and donors with better financial insight.
The law requires corporations to report the effectiveness of internal controls and requires an external auditor to confirm the statement. Corporations must document their internal control structure well and evaluate its effectiveness to ensure the accuracy of financial data. By using a Sage Fixed Assets software package, a company can ensure that its depreciation calculations are in line with current legislation and IRS tax rules.
Stop wasting money on overpayment of taxes and insurance
Many companies have “ghost” inventory in their system. A “ghost” asset is an item or company property that is lost, stolen, or just unusable but is still in the inventory reports as active or available. The unusable property can cause a loss in productivity when it is unavailable when needed. This can also be seen as high threat and can result in higher taxes and higher insurance rates. If these assets are no longer usable but are not removed from company records, companies tend to continue to pay property taxes and insurance on them. Even mistakes in the calculation of the item’s depreciation can result in a company overpaying for insurance as it is based on a percentage of current fixed assets. If this calculation is wrong, you’re probably paying too much.
Tax laws are constantly changing so it is wise to make sure your depreciation calculations are correct. Fixed assets are often expensive to purchase as well as to maintain. Fortunately, these assets also represent significant tax savings in the form of depreciation write-offs. Making sure inventory of fixed assets, their value, and your depreciation is accurate will maximize your tax savings. Using Sage Fixed Assets software can assist companies in maintaining their fixed assets and ultimately save money they didn’t even realize was being wasted.
Sage Fixed Assets software simplifies tracking, planning and reporting
With Sage Fixed Assets, you can choose the modules that are important to your business.
- Sage FAS—Depreciation helps you manage the entire fixed asset life cycle from acquisition to transfers and disposals. It can help you prepare your year-end financials, allocate costs, calculate depreciation, eliminate redundant data entry, and store digital images of key asset records.
- With Sage FAS—Tracking allows you to conduct thorough physical inventories of your fixed assets with an easy graphical step-by-step processes and mobile devices.
- Sage FAS—Planning helps you take control of your fixed assets through flexible management of capital budgeting and construction-in-progress projects.
- Sage FAS—Reporting provides an endless set of custom reports that can help monitoring and decision-making.
To learn more about Sage Fixed Asset software and how it can be integrated with your current ERP or Sage software, contact Emerald TC.