CPA coordination & tax-ready booksFixed Asset Records: What to Track When You Buy Equipment

Somewhere in your business is a laptop that, according to your books, doesn't exist. It was bought in 2023, expensed to "Office Supplies" along with printer paper, and it has been doing spreadsheets ever since.

Meanwhile, your balance sheet still lists a forklift you sold two years ago.

This happens all the time, and it's not a character flaw. Equipment purchases are infrequent, so nobody builds a habit around them. A fixed asset register for a small business is that habit, written down. Here's what to track, how the capitalize vs expense decision works on the books side, and where your CPA takes over.

What is a fixed asset, in bookkeeping terms?

A fixed asset is something your business buys to use for more than a year, rather than to resell or use up right away. Think vehicles, machinery, tools above a certain cost, computers, furniture and improvements to a space you lease or own.

Instead of hitting the profit and loss statement all at once, a fixed asset goes on the balance sheet and gets expensed gradually through depreciation (spreading the cost over the years the asset is useful). That's why it matters where a purchase lands. A $60,000 truck expensed in one month would make that month look terrible and every later month look better than it should.

Capitalize vs expense: who decides what

Capitalizing means recording a purchase as an asset. Expensing means recording it as a cost in the period you bought it.

For your books, most businesses set a capitalization policy: a dollar threshold, per item, above which purchases get capitalized. Below it, they're expensed. Your accountant or controller can help you pick a sensible level for your size.

For your taxes, the treatment can be different, and that is your CPA's decision. Book depreciation and tax depreciation can end up different, and that's normal. What the CPA needs from the books is a complete, current asset list.

Your job (and your bookkeeper's) is to make sure every qualifying purchase is captured with the right details, so your CPA can make those calls.

What a fixed asset register for a small business should track

For each asset, record:

1. Description (specific enough to identify it: "2025 Ford Transit 250, white," not "van").
2. Vendor and invoice number.
3. Purchase date and the date placed in service (the day it actually started being used).
4. Full cost, including sales tax, delivery, installation and setup. These count as part of the asset's cost.
5. Asset category (vehicles, equipment, computers, furniture, leasehold improvements).
6. Serial number or VIN.
7. Location or assigned employee.
8. How it was paid for (cash, loan, lease), with the loan or lease reference if any.
9. Useful life and depreciation method for the books.
10. Disposal date, how it left (sold, traded, scrapped) and any amount received.

A spreadsheet works fine. Fixed asset tracking doesn't need fancy software for most small businesses; it needs to be kept current.

A worked example: one van, one trade-in

Say you run a hypothetical plumbing company. In March you buy a new service van:

• Van price: $54,000
• Sales tax: $3,780
• Shelving and upfitting: $7,200
• Delivery: $450

The asset's cost is $65,430. If your bookkeeper recorded only the $54,000 van and expensed the rest to "Repairs" and "Supplies," the asset is understated by $11,430, and your P&L took a hit it shouldn't have.

The same month, you trade in an old van. On the books, it had an original cost of $38,000 and accumulated depreciation (the total depreciation recorded so far) of $30,400, so its book value is $7,600. The dealer gives you $9,000 in trade-in credit. Your books should remove the old van's cost and its accumulated depreciation, and the difference produces a gain on the books of $1,400. Your CPA handles how that trade-in is treated for tax purposes, which may differ.

If the old van is never removed, the balance sheet keeps showing a vehicle you don't own. Lenders notice things like that. For more service-business specifics, see bookkeeping for HVAC and plumbing companies.

When to update the register

Three moments:

• When you buy. Add the asset the same month, with the full invoice.
• When something leaves. Sold, traded, stolen, retired. Record the date and the amount received.
• At year-end. Walk through the list. Does every item still exist? Is anything missing? This is part of a solid year-end close checklist.

That last one is a little like cleaning out the office fridge. Nobody wants to do it, and everybody's happier afterward.

What your CPA needs from the register

At year-end, your CPA will want the list of additions and disposals for the year, with invoices for the bigger items and loan or lease paperwork where it applies. That's one item on the full list in what does my CPA need from me.

On ABFI's side, keeping the register current and reconciling it to the balance sheet each month is controller work, part of controller services. At year-end, the asset list goes to your CPA as part of CPA coordination. We don't make the tax depreciation decisions; your CPA does, and we record their adjustments back in the books afterward.