A capital equipment list is a written listing of all the equipment that you will require to run your business. This list can be redundant or unnecessary if you have a business plan. However, it may help you to keep your finances in order as you start your new business.
Start a small business in the startup phase. Make a list of all your equipment. You can always add items later.
What is capital equipment?
Capital equipment can be moved. It is not an integral part of the building. Permanent bookcases that were built during construction of your office are part of the property. If the same bookcases are not able to be moved without destroying the wall, they will still be considered capital equipment. The physical building where you have your business is considered “real property” and not capital equipment.
Look around and see what you can find that qualifies. You can include your computer, monitors, printer, scanners, software, chair, bookhelves, telephone answering system, fax machine and conference room table in your capital equipment list. This is for an in-home setup.
Also, capital equipment should have a life expectancy. This is usually applied to items that are used for more than one year. However, this time period can vary depending on the industry.
You may be surprised at how complex your business is once you begin to create this list.
What should you include on your capital equipment checklist?
Assign a value to items that you already own. This value will usually not be the replacement value but the depreciated. You can find the original purchase date and purchase price to determine the depreciated amount.
It’s a great strategy to show how you personally contributed to the business’s start-up. Why should you invest in your own business if you aren’t willing?
For accounting purposes, you will also need information about capital equipment. For accounting purposes, many new businesses don’t realize that they might need to depreciate their equipment after a specific time. This time period is known to vary.
Computers are an excellent example. Computers often lose their operational value before they have any financial value. Many of these equipment are now considered disposable due to the declining cost of computer-related and computer-related equipment. It is not depreciated, but instead treated as an expense.
Name major and minor purchases, model numbers, purchase prices, and other details when creating this list. This information can be organized by your accountant or accounting software. This information is important for your business plan and financing. It is also critical for your insurance provider in the event of loss or theft. You might also want to take photos or film your equipment. This information can be stored offsite in a safe deposit box.
What to leave off your list
Capital equipment lists do not include any expendable items like pens, paper or daily chocolate intake. These items are still expenses so it is important to track the amount you spend on them when you calculate your bottom-line.
