You also need to know the difference between Tangible and Intangible Assets.
Let’s take a deep dive into these concepts.
What is an Asset.
“… an asset is an economic resource. Anything tangible or intangible that is capable of being owned or controlled to produce value and that is held to have positive economic value is considered an asset.”
Assets are anything you can own, which have some value and provide an economic return on investment in the future.
Assets are needed by every company for regular functioning and they are classified into two different types: 1) Non-current assets; 2) current assets.
Non-current assets are divided into two types: 1) tangible assets; 2) intangible assets.
Let’s deepen these concepts and understand the difference between both.
Tangible Assets Vs Intangible Assets.
Tangible assets are essentially physical objects: for example, apartments, buildings, land, vehicles, inventory, equipment, machinery, furnishings, etc
These assets are not available to customers but are needed for a company to operate day by day.
Tangible assets have a risk of damage: accidents, theft, etc.
There are two types of tangible assets: 1) Current, 2) Fixed.
Current assets can be easily turned into cash and used to save a company from short-term debt problems.
Fixed assets are physical items that cannot be sold.
These include land, equipment, machinery, vehicles, needed to run the business.
Intangible assets are nonphysical objects: e.g. Websites, software, applications, Internet domain names, Ebooks, medical records, digital manuscripts, trade secrets, copyrights, franchises, patents, trademarks, etc.
Intangible assets may have much more value than a company’s tangible assets.
Key differences between tangible and intangible assets
Here are the key differences between tangible and intangible assets :
- Tangible asset is a materially present asset with monetary value. They are present with the company in their physical form.
- Intangible asset is an incorporeal asset: it does not exist physically but has a an economic value.
- Decrease in the value of a tangible asset is called “depreciation”,
- Decrease in the value of an intangible assets is called “amortization”.
- Tangible assets are easily exchangeable into cash in case emergency.
- Intangible assets are not so easily exchangeable into cash in case emergency.
- “Salvage value” is the residual value of assets after they are completely depreciated. Tangible assets have salvage value; Intangible assets don’t.
- Tangible assets are generally accepted to take a loan. Intangible assets cannot be used to raise loans.
Is a Website an Asset?
Websites are today one of the major means of communication, and you can also make some good money for it.
You can use your website to share with others what you do and what you think, or give information about your business, register members, receive donations and contributions.
These uses are growing day by day, and we can easily consider a website as one of the most powerful assets.
Maintaining a website can be expensive, and can have a significant impact on your financial statements, so pay attention to costs of ongoing repairs and maintenance, hosting, domain name, etc.
Before starting a new website, analyze the costs involved at various stages of development. Some of these can be amortized over time, others will be expensed as incurred.
These are usually the stages of website implementation:
- Choose a Niche;
- Choose a host;
- Choose a domain name;
- Developing infrastructure;
- Implementing graphics and design;
- Writing content;
- Running the website;
- Website maintenance.
Expenses during this stage may occur in these phases and include:
- developing a website content plan
- choosing the hardware
- choosing the software
- choosing the right plugin
- website maintanance
Conclusion: is your Website an asset?
Yes. Your website is one of your most powerful assets.
It’s a digital property you own and control.
It’s your digital home, your cyber-land, your base camp.
It’s where you establish a direct online supply chain to your customers according to what they are in need.
It’s the place that allows you to communicate with your customers, followers, and visitors worldwide.
Your website is a business asset, and if you want to make some real money with it, it needs the same efforts and cares that any other business assets demand.