What exactly are assets, anyway?

You are a small business owner. You are the best at what you do. You have passion for what you do. Yet, you aren't quite sure what people are talking about when you hear the word "asset". That's something your CPA will handle at tax time, right?

Very simply put, as asset is something you own. Things like your computer, printer, bank accounts, machinery or equipment for your business, and furniture in your office, if you have one. They are typically listed first on your balance sheet. Assets must equal the sum of liabilities and equity. I'll tell you about those items another time. There are two basic types of assets.

• Current Assets. These are those items that can easily be liquidated into cash within a one year period. Bank accounts, customer accounts receivable, inventory, and petty cash are examples.
• Fixed Assets. These items are typically more expensive items that you purchase to run or manage your business. Examples include furniture, equipment, machinery, vehicles, buildings, land, and leasehold improvements.