What does this Whitepaper offer?
Solutions for best practices: Sage Fixed Assets
Sage Fixed Assets solutions offer a range of applications for accurate fixed asset accounting and depreciation based on the size of your business and your type of organization:
- Sage Fixed Assets—Lite Depreciation: Designed for small businesses with fewer than 1,000 assets
- Sage Fixed Assets—Depreciation: For medium-sized firms
- Sage Fixed Assets—Premier Depreciation: Delivers increased speed and capacity for midsize to large companies
- Sage Fixed Assets—Planning: Allows for easy management of projects during the construction of fixed assets
- Sage Fixed Assets Gov Solutions: Specially designed for the GASB 34/35 needs of governmental entities
- Sage Fixed Assets Nonprofit Solutions: Designed to help nonprofit organizations fully leverage their fixed assets
Why is fixed Asset Management necessary?
The savings potential of your improved fixed asset management is often overlooked in the world of accounting. Sound fixed asset management can yield substantial tax savings in your depreciation deductions. Conversely, suboptimal fixed asset practices can threaten the accuracy of your financial reports and negatively impact your bottom line. Establishing the highest standards of depreciation accuracy and best practices in fixed asset management will pay off in savings and efficiency for:
- Corporate accountants managing fixed assets
- CFOs striving to optimize business efficiencies and plan capital budgets
- Government asset managers complying with GASB 34/35 standards
- CPAs providing tax, depreciation, and auditing services to your clients
- Non-profit executives seeking to gain maximum leverage from already strained resources
How would this Whitepaper help you?
The goal of this paper is to help you learn about best practices for fixed asset management and suggest tips for implementing them in your organization.
These best practices will help you to seek out potential savings in your fixed asset base and show you how to save time in the process. The suggestions will guide you in how to:
- Establish an accurate baseline of fixed assets
- Select the right tool for the job
- Rely on accurate depreciation calculations
- Stay up to date with legislative changes
- Produce targeted financial reports
- Get trained on the system you employ
- Add modules or services when appropriate
How do end up overpaying taxes and insurance?
If assets that are no longer in service are not properly disposed of in accounting records, companies can continue to pay property taxes and insurance on them. Companies are, on average, overpaying taxes and insurance on approximately 12 percent of the fixed assets on the books. Even mistakes in the amount of depreciation calculated can result in over-payment, as insurance premiums are usually based on a percentage of the total current value of fixed assets.
As you consider fixed asset management software, it’s helpful to determine the return on investment (ROI) that optimized fixed asset management would provide your company. To calculate ROI, you’ll look at the total value of your fixed assets and estimate the amount of lost or stolen assets on your books. The average for most companies is about 12 percent. Then, based on your tax and insurance rates, calculate the value of overpayments on taxes and insurance for your ghost assets. Compare this annual expenditure to the cost of purchasing and maintaining support on a fixed asset management system.
Following is an example of the effects of 12 percent overpayment of federal and state income tax, personal property tax, and insurance:
|Number of fixed assets||500|
|Total cost of depreciable fixed assets||$2,000,000|
|Average value of each asset||$4,000|
|Percentage of ghost assets||12%|
|Total cost of ghost assets||$240,000|
|Tax rate–federal and state||36% on 40% avg. remaining asset life|
|Personal property tax||3.4% on 70% of assets|
|Insurance rate||1 cent per $1|
|Potential overpayment—federal and state||$34,560|
|Potential overpayment—personal property tax||$5,712|
|Total potential annual overpayments||$42,672|