- Maintaining a Current Fixed Asset Listing
- Increase Cash Flow and Maximize Tax Depreciation Deductions
- Uncover Tax Benefits
- Why Fixed Asset Software Is Useful
Fixed assets are your nonprofit organization’s tangible assets. These are typically purchased to generate income or to be used long term in your operations. Fixed assets typically comprise a significant part of an organization’s balance sheet, including items like equipment, furniture, computers, machinery, vehicles, tools, and real estate.
Because your fixed assets can significantly impact your balance sheet, it’s essential to ensure you have a solid fixed asset review process. For many nonprofit organizations, this process could be improved with the right accounting software from MIP Fund Accounting®.
Maintaining a Current Fixed Asset Listing
To ensure accurate financial statement reporting, tax planning purposes, and cashflow and budgeting projections, it’s essential to maintain a current fixed asset listing. Your organization’s accounting department can stick to best practices to maintain your fixed asset listing effectively and efficiently.
- Establish a maintenance schedule: Some asset purchases don’t need to be recorded as fixed assets, though there may be other reasons to track purchased items and the associated acquisition dates, such as keeping up with required maintenance and identifying a replacement timeline.
- Create a capitalization policy: With a capitalization policy, your nonprofit organization will establish a dollar threshold to determine the items that are expensed as incurred versus the expenditures that are capitalized as fixed assets. Capitalization policies should be maintained and written with other accounting policies.
- Regularly review your fixed asset listing: Similar to your business metrics, goals, and key performance indicators, you should regularly review your fixed asset listing. The best practice is updating and verifying your listing at set intervals.
- Train staff: Properly training your staff is always a smart investment. Members of your finance and accounting teams should be trained to develop the essential knowledge and skills needed for fixed asset tracking. Training will also ensure your staff follows your internal policy consistently. You may want to train staff as soon as they’re hired and provide annual training throughout employment.
- Use fixed asset software: With fixed asset software, you can manage your fixed asset listing in-house. Organizations with multiple fixed assets or assets in different locations can benefit greatly from investing in fixed asset software. You track your assets, reduce errors, and budget for future acquisitions.
Increase Cash Flow and Maximize Tax Depreciation Deductions
One purpose of improving your fixed asset review process is to increase your organization’s cash flow and maximize tax depreciation deductions. Keeping up with frequently changing tax rules can be challenging and affect asset depreciation methods. With an efficient fixed asset review process, you can uncover missed depreciation deductions, capture these, and account for them in your current tax return filing. Additionally, your organization can clean up its fixed asset ledger and mitigate audit risks by implementing or improving a fixed asset review.
At MIP Fund Accounting®, our software can handle the tax compliance requirements for your nonprofit organization. When you choose our system, you can increase your organization’s cash flow and maximize tax depreciation deductions.
Uncover Tax Benefits
Typically, organizations with extensive fixed assets spend a lot of time and effort on collecting, reconciling, validating, and reporting these assets and the related depreciation data. If your organization lacks an effective process for reviewing fixed assets, this could lead to the improper tax treatment of your assets and increased costs, lost tax savings, and potential compliance issues. With a fixed asset review, you can uncover the following tax benefits:
- Improved cash flow
- Permanent tax savings
- Sales and property tax savings
- Enhanced monetization of assets
- Income tax deferral via accelerated deductions
- Increased utilization of incentives and available credits
- Improved capitalization procedures and documentation
Why Fixed Asset Software Is Useful
Since fixed assets are used by your organization over the long term, you need a way to properly manage them. This is where fixed asset software comes in. You can use bar code technology for managing the assets used off-premises, like machinery, equipment, and employee laptops.
With the features offered by fixed asset software today, you can track maintenance schedules, depreciation, the asset’s current condition, and the asset’s location. Fixed asset software also handles standard depreciation calculation with common depreciation methods, and your nonprofit organization can select the depreciation method best suited to the kind of assets you currently own. The following are additional reasons fixed asset software may be useful to your organization:
- Enhanced tracking: Though many of your nonprofit organization’s assets may be stationary, you may need to track assets like tools, heavy equipment, and laptops that are used outside the workplace. With fixed asset software, you can much more easily track asset usage, condition, and location. Some software options also offer maintenance schedules for assets that require it.
- Improved organization: When all your organization’s asset data is stored in one software application, you eliminate the need to use several spreadsheets for tracking all your assets.
- More accurate reporting: With fixed asset software, you can manage your nonprofit organization’s assets along with your other accounting tasks. This means you can reduce data entry and the risk for errors, which leads to more accurate reporting.
When choosing your fixed asset software vendor, consider the features and functions available. You may want features like deployment method, multiple depreciation methods, multiple book support, and integration capability. Both your organization and your accounting firm can handle fixed asset management via this software.
Along with doing your research on each product, try out the software before you purchase by taking advantage of a demo or free trial, which can give you a better idea of what the software can do and how comfortable you are using it.
You can use MIP Fund Accounting® accounting software for fixed asset tracking. Our solution offers the features and functions you need, as our system was designed specifically for nonprofit organizations like yours.
Request a Demo of MIP Fund Accounting®
Our MIP Fund Accounting® accounting software is a scalable, comprehensive system ideal for informed decision-making and financial management. With our software, you can track each dollar, streamline HR management, adapt to changes with custom reporting, and scale with the needs of your organization.
You get purpose-built technology with MIP Fund Accounting® that is designed to address the unique complexities of managing the finances of a nonprofit. Our system can:
- Provide fraud protection
- Offer FASB- and GASB-compliant reports
- Integrate easily with other critical systems
- Provide a clear trail for audits
- Support multi-dimensional chart of account
- Enable financial transparency for stakeholders
Are you ready to improve your organization’s fixed asset review process? Request a demo to experience MIP Fund Accounting® in action today.