What to include
Record items that you expect to use for more than a year and that cost more than your capitalization threshold. Typical examples are vehicles, computers, machinery, furniture and building improvements. Small items below the threshold are expensed and do not need a line.
Decide the threshold in writing and apply it consistently.
Columns that matter
For each asset keep a unique ID, description, serial number, location, vendor, purchase date, date placed in service, cost, expected life, depreciation method and, later, disposal date and sale price. Add a column for the invoice file name so you can find the support quickly.
The cost should include the purchase price plus reasonable costs of getting it ready, such as delivery and installation. Ask your tax preparer what is included.
Tagging and physical checks
For valuable equipment, attach a small tag with the asset ID. Once a year, walk through and confirm each item is still there, in working order and in the listed location. Missing items need explanation: sold, lost, stolen or scrapped.
This check helps with insurance too, because you know what is covered and what it would cost to replace.
Tie the register to the ledger
The total cost on the register should equal the asset accounts on the balance sheet, and the accumulated depreciation should match as well. Reconcile at least annually. A difference points to an asset that was expensed, never added or disposed of without removing it.
Some accounting systems have a fixed asset module. If yours does not, a spreadsheet plus a monthly journal entry for depreciation works.
Disposals and trade-ins
When you sell, scrap or trade in an asset, record the date and proceeds. Remove its cost and accumulated depreciation, and book any gain or loss. Keep a copy of the bill of sale.
Tax effects can arise on sale, including reporting of prior deductions, so tell your tax preparer before disposing of large assets. A register that is kept current makes that conversation short.
Why insurance and lenders care too
A current register helps if there is a fire, theft or flood. You can show the insurer what you owned, when you bought it and what it cost. Lenders may ask for an equipment list when you apply for financing or pledge assets as collateral. Banks also like to see that the business tracks what it owns. A register that took an hour to start and a few minutes a quarter to maintain can save days of reconstruction at a stressful time.
Assign one person to own the register. When equipment arrives, that person gets the invoice, assigns the ID and updates the sheet within the week. Ownership is what keeps the list alive, since an unowned register is usually abandoned by the second year.
Common questions
Do I need software for a register?
No. A spreadsheet is fine at small scale.
What about leased equipment?
Leases have their own accounting rules. Ask your CPA how yours should appear.
How long should I keep records of assets?
Keep them while you own the asset and for the recommended period after. Check current IRS guidance.
This guide is general information, not tax, legal or accounting advice. Rules, fees and due dates change; check with the IRS, the NJ Division of Taxation or a licensed professional for your situation.