Gather ’round boys and girls: It’s time for a spooky Halloween story! This one involves the dreadful ghosts and zombies that may be hidden among your fixed assets.
Our storyteller for today is none other than Gary Maher, our Sage Partner Account Manager. Gary’s tale of horror involves these gremlins that can rob your company of tens of thousands of dollars each year, or worse, cause a major headache in an audit.
So without further ado, here’s Gary and his
guest blog post frightening tale of “The Boogeymen of Your Bottom Line”:
October is a great month to do something about your ghost and zombie assets. After all what’s scarier than a ghost and zombie? How about a ghost and zombie that are stealing money from you?
Okay, well maybe they are not stealing, but they are costing you money you don’t need to spend (or will cost you money). So what makes them this frightening?
“Ghost assets” are assets currently on your books, but are no longer in service. Items that have been disposed of, misplaced, lost, stolen or damaged — but are nowhere to be found in your actual inventory — are some of the most common ghost assets. You threw that computer or phone away but — boo! — they are still on the books.
These can be quite prevalent in most organizations as the average company’s inventory is comprised of 15 to 30 percent ghost assets. For example, if you have $2 million in depreciable fixed assets and 15 percent of that is ghost assets (taking the low end of the range), then you are listing $300,000 in assets that don’t exist. Again, assuming average tax rates and depreciation, these ghost assets are costing your organization more than $50,000 in tax overpayments each year! Those are expensive ghosts! Of course, eliminating them may make you feel like a superhero.
On the other side are the “zombie assets”. A zombie asset can be found during your physical audit; however, it is nowhere to be found on the fixed assets register. Tracking these zombie assets brings value back to your company and protects you from fines for under reporting. (Think how scary an actual audit would be in this scenario.)
Generally, each company has zombie assets equal to 12 percent of their inventory just walking around lifeless. Thus, in the value of ghosts vs. zombies, the ghosts win but both are hurting your organization. In fact, using the industry averages, it may be frightening to realize that almost 40 percent or more of your organization’s assets can be classified this way.
So how can you ensure you are compliance but not paying more than you owe?
Automation is the key. Spreadsheets and manual methods won’t work beyond a few assets and help create ghosts and zombies by being inefficient. Automation tools, such as Sage Fixed Assets, enable more complete and organized physical audits, which are essential to knowing which assets are where. Of course, having better ongoing methods for tracking assets as they are added or disposed of helps as well.
In short, tools such as Sage Fixed Assets are smart investments and pay for themselves rapidly, not only in saved taxes and greater efficiencies (see for yourself with this easy to use Sage Fixed Assets ROI calculator), but also in piece of mind.
Here’s another scary fact, did you know there are more than 300,000 GAAP and IRS rules and regulations for depreciation calculations? Sage Fixed Assets does, and keeps up with them for you protecting you from audit horror stories.
Whatever method you choose, make sure to make this Halloween a little less frightening by eliminating the ghost and zombie assets in your organization. For more information on how Sage Fixed Assets can help, visit www.practicalsoftwaresolutions.com/fixedassets or feel free to email me at firstname.lastname@example.org.
Happy zombie hunting and ghost busting!