Tangible assets are any assets in your business that have a physical form. They comprise both fixed assets such as machinery, building and land, and current assets such as inventory and cash.
What are tangible assets?
Tangible business assets are items with a clear purchase value that your business uses to operate, produce goods and services, or create profit. Tangible assets can be short-term or long-term. They generally fall under two main categories:
- financial capital
- physical equipment, systems and infrastructure
Examples of tangible assets may include:
- cash and cash equivalents
- your business premises, property or land
- company vehicles
- machinery and equipment
- IT equipment
- any payments owed to you
- stock-in-hand and the value of any confirmed orders
Businesses can also have non-physical assets such as goodwill, brand and intellectual property. These are known as intangible assets.
Tangible asset valuation
Tangible assets are the backbone of your company. They represent much of your company's worth but are generally not for sale to customers. You can use tangible assets:
- to provide goods or services
- to contribute to your business' cashflow
- to raise cash in case of emergencies
- to meet your business objectives and goals
- as collateral for loans
Find out more about business asset valuation.
Managing tangible assets
To make the most of them, you should track and manage all tangible assets in your business. For accounting purposes, you should record all fixed assets on your balance sheet. Certain assets may decrease in value over time and you may be able to depreciate them - ie allocate their cost over their useful lifespan. See more on depreciation of assets.
An efficient inventory and assets management system will allow you to track the location, quantity, condition and maintenance needs of your tangible assets. It may also help deter theft of your assets. See more on managing assets in business.
As well as theft, your tangible assets may also potentially be at risks of loss or damage. You may need to consider insuring your assets or putting certain precautionary measures in place. Find out more about protecting business assets.