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:
- Designed for small businesses with fewer than 1,000 assets
- For medium-sized firms
- Delivers increased speed and capacity for midsize to large companies
- Allows for easy management of projects during the construction of fixed assets
- Specially designed for the GASB 34/35 needs of governmental entities
- Designed to help nonprofit organizations fully leverage their fixed assets
Why is fixed Asset Management necessary?
Savings potential of your improved fixed asset management is often overlooked in the world of accounting. In addition, sound fixed asset management can yield substantial tax savings in your depreciation deductions. In conclusion, suboptimal fixed asset practices can threaten the accuracy of your financial reports and negatively impact your bottom line. Therefore, establishing highest standards of depreciation accuracy 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?
Hence, the goal of this paper is to help you learn about best practices for fixed asset management. These best practices will help you to seek out potential savings in your fixed asset base. 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 off, companies can therefore continue to pay tax on them. Hence, companies are, on average, overpaying taxes and insurance on approximately 12 percent of the fixed assets on the books. An mistakes in the amount of depreciation calculated can result in over-payment.
To calculate ROI, you’ll look at the total value of your fixed assets. And also, 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 for 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:
|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 overpayment||$42,672|