All business owners face the possibility of a fire, tornado, theft or other disaster. One of these occurrences could destroy everything you worked so hard to create. When this happens, a personal property or asset - inventory
will provide detailed documentation of the contents of your business and ease the claim process. Youll recover faster and usually with a higher settlement.
You most likely have a depreciation schedule. But consider that the rule of thumb by most CFOs and CPAs is to expense items valued at less than $500. How many items are owned by your company that have a price tag of
under $500 and are never entered on a depreciation schedule?
In addition to listing the contents, item by item, youll also be asked by the insurance company to include the purchase date and cost. Having a document to refer to when required to complete a claim will make the process less
stressful. It will also help you get back to doing business in a much shorter timeframe.
Though disaster recovery is the main purpose for a personal property inventory, there are many other reasons to have a thorough listing and photographs of your belongings.
MOVING So youve outgrown the building you started in! Or you have been leasing and purchased a building. When packing, youll have to unplug all the electronics and appliances. This is the perfect time to record model
and serial numbers while you create your inventory.
Most likely, youre moving locally, so its best to create the list as you unpack. This will allow you to identify the location where each item is being placed.
STORAGE Small businesses sometimes outgrow their building, but choose not to move. Therefore, if you have off-site storage, create an inventory of everything that is located elsewhere.
DISSOLUTION OF A PARTNERSHIP OR SELLING A BUSINESS How do you know the value of your business without a complete, detailed list of all of your assets? Lets say you have 10 tables, each costing $80. Thats $800,
and most likely not on your depreciation schedule or any other document, for that matter. How many chairs, desks, lamps, etc., are owned by the business? To ensure that you are receiving a fair and equitable price for your
business, compile an extremely detailed list of all of your assets.
PURCHASING A BUSINESS A woman had recently purchased a restaurant. When asked if she had an inventory of its contents, her response was, "No, I have no clue what came with the restaurant; I trust my business broker."
If you dont know how many tables, chairs, computers, printers, and specific industry items (in this case, pots, pans, etc.) you have, how will you know if you paid a fair price? An itemized inventory of the contents is a document
you should require.
Most small-to-medium sized business owners agree it is important, but few have this documentation. Reasons cited are that they and their employees are too busy, it takes too long, they dont know how, or realize they will not
keep it up to date if they do create one.
If you are in one of these categories, seek the assistance of a professional to provide the service for you. Verify they are bonded and insured. In addition to the inventory service, the provider should also include secure back
-up of your records and have a process in place to update your records annually. Without the updates, the report will be outdated very quickly.
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