Types of Long-Term Assets and How They Can Affect Your Business

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As a business owner, you know how important it is to protect your assets. Chances are, you’ve considered an LLC as a way to protect them.

“The Limited Liability Company or LLC is the cornerstone of any successful asset protection strategy,” according to Anderson Advisors. “It provides an incredible ‘box’ that can hold a wide variety of assets, protected by several layers. It doesn’t matter what you put inside them—cash, rental properties, vehicles, etc. LLC asset protection will help save those assets you value most.”

However, knowing you need to protect your assets and knowing which assets need protecting are two different things. If you run your own business, it’s important to know the three long-term assets and how they can affect your business.

Tangible Assets

When you think of assets that you need to protect, tangible assets are likely to come to mind first because they are things that you can see and touch. Anything that has a tangible form is considered a tangible asset.

These kinds of assets can include:

  • Machinery
  • Buildings
  • Land
  • Office furniture
  • Inventory
  • And more

It is important to differentiate between fixed assets and current assets. Fixed assets are things like machinery that are used for more than a year. Current assets, like inventory, are used within a year.

Tangible assets are what’s used in a collateral loan, which means they can be taken away. Because they are essential to the success of your business, they should be guarded carefully.

Intangible Assets

Intangible assets can be more difficult to pinpoint because they aren’t things you can see and touch. They are literally intangible.

These kinds of assets can include:

  • Patents
  • Trademarks
  • Copywriting
  • Brand recognition
  • Customer lists
  • Pictures

These kinds of things may not have a direct impact on your business, like the machinery you use on a daily basis or the building your office is in, but they are still extremely important to consider. A patent that isn’t protected can result in another company cornering the market while your business depends on brand recognition to get its foot in the door. Therefore, intangible assets are just as important to protect as tangible ones.

Goodwill Assets

Goodwill assets can be the most difficult to understand. They are the most difficult to quantify in financial statements as well, but they deserve your attention just as much as the other items on this list.

Not all businesses will have to deal with goodwill assets. As a matter of fact, many won’t. That’s because they involve purchasing another brand or company.

Goodwill involves any extra money that was used to purchase an entity. It is present when the purchaser pays more than the market price to acquire another business. Negative goodwill is also possible if a company pays less than the fair market value for the acquired company’s assets and liabilities.

If you have any questions or concerns about your assets, you should contact a legal advisor who can make sure all of your company’s assets are protected.

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