Understanding Big and Small Assets: A Guide for Business Owners
- rebekaheliasllc
- Oct 7
- 3 min read
Hello it’s Your Bookkeeper Rebekah!! Here to talk to you today about Assets!! Every business owns assets — from the laptop on your desk to the building your company operates in. But not all assets are created equally. Understanding the difference between big and small assets (often referred to as fixed vs. current assets) can help you make smarter financial decisions, improve cash flow, and keep your books accurate.
So let’s break it down and make it make sense!
What Are Business Assets?
In short terms, assets are things your business owns that have value. They can generate income or revenue, lessen expenses, or be sold for cash in the future.
Assets fall into two main categories:
Big assets (long-term or fixed assets)
Small assets (short-term or current assets)
Big Assets (Fixed or Long-Term Assets)
Big assets are items your business keeps for more than one year to support operations and generate income. They’re typically major purchases that lose value gradually through depreciation.
Common examples:
Buildings and land
Vehicles and heavy equipment
Office furniture
Machinery and tools
Computers and servers
Investments
Key features:
Useful life longer than a year
Recorded as capital assets on your balance sheet
Depreciated over time (you write off a portion each year, check with Your Bookkeeper Rebekah or CPA for depreciation schedules $$$)
Why they matter:
Big assets impact your long-term financial health. They show lenders and investors that your business has stability and resources to grow. However, these assets also tie up cash — so managing them wisely is key. Money tied up in assets takes away from your operational budget to handle day to day expenses and business needs.
Small Assets (Current or Short-Term Assets)
Small assets are resources your business plans to use up, sell, or turn into cash (revenue) within a year.
Common examples:
Cash and checking accounts
Accounts receivable (money owed to you)
Office supplies
Inventory
Prepaid expenses
Key features:
Short-term value
Not depreciated — they’re expensed right away
Essential for daily operations and liquidity
Why they matter:
Small assets keep your business running smoothly day-to-day. They’re your working capital or operation budget, helping you pay bills, manage payroll, and respond to short-term needs.
How to Track Big and Small Assets
To stay compliant and financially organized:
Create an asset register
Keep a record of all assets, their purchase dates, costs, and expected useful lives.
Set capitalization thresholds
Many small businesses set a dollar amount (e.g., $2,500). Anything above that is treated as a big asset and capitalized; anything below is expensed as a small asset.
Use accounting software
Most bookkeeping programs (like QuickBooks or Xero) let you categorize assets automatically and calculate depreciation.
Review annually
Reassess your big assets’ value each year and adjust depreciation schedules as needed – check in with Your Bookkeeper Rebekah for help!
Why It Matters for Taxes
Understanding the difference between big and small assets affects your tax strategy:
Big assets: You may claim depreciation or Section 179 deductions to recover costs over time.
Small assets: These can usually be expensed immediately, reducing your taxable income in the same year.
The right mix of both can help lower taxes and improve cash flow.
Final Thoughts
Knowing how to separate big and small assets isn’t just about bookkeeping — it’s about making smarter business decisions.
Big assets help your company grow. Small assets keep it running. Managing both effectively ensures your financial reports are accurate and your business stays healthy.
Discovered you have big assets not recorded in your books? Need help on how to record them properly? Reach out to Your Bookkeeper Rebekah to help tackle that problem.
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