Assets are the items your company owns that can provide future economic benefit. Liabilities are what you owe other parties. In short, assets put money in your pocket, and liabilities take money out!
What are the examples of assets?
Personal Assets
- Cash and cash equivalents, certificates of deposit, checking, and savings accounts, money market accounts, physical cash, Treasury bills.
- Property or land and any structure that is permanently attached to it.
- Personal property—boats, collectibles, household furnishings, jewelry, vehicles.
What are common liabilities?
Some common examples of current liabilities include:
- Accounts payable, i.e. payments you owe your suppliers.
- Principal and interest on a bank loan that is due within the next year.
- Salaries and wages payable in the next year.
- Notes payable that are due within one year.
- Income taxes payable.
- Mortgages payable.
- Payroll taxes.
These are usually classified as current or fixed. Current, or short-term, assets include cash or inventory. Fixed, or long-term assets, include equipment or land. Liabilities are debts your business owes another person or entity. Like assets, you’ll have to define liabilities as current or long-term.
How to protect your business assets and equipment?
This can include equipment, vehicles, medical tools, machinery, etc. There are a number of things we need to do. First, we need to protect your business losing assets after a lawsuit strikes. Then, we need to protect you, personally, from litigation and asset seizure. We need to protect your equipment when someone sues you and/or your business.
What does it mean when an asset is placed in service?
“Placed in service” means the time that property (that is, an asset) is first placed by the taxpayer in a condition or state of readiness and availability for a specifically assigned function,” as in a trade or business or for the production of income.
How are assets valued in a business accounting system?
The value of an asset on your business accounting system isn’t related to the way the asset was purchased. For example, an asset like a company vehicle that is purchased with cash is valued and depreciated the same as a vehicle purchased with a loan. The IRS requires that you place the asset in service to claim expenses and depreciation deductions.
