Business owners face the possibility of a fire, tornado, theft or other disaster. One of these instances could destroy everything you worked so hard to create. When this happens, a personal property - or asset - inventory will provide detailed documentation of the contents of your business and ease the claim process. You'll recover faster and maximize your settlement.

You most likely have a depreciation schedule, and are probably figuring that's where you'll access that list. But consider that the rule of thumb by most CFOs and CPAs is to expense items valued at less than $500. How many items are owned by your company that have a price tag of under $500; are they documented?

In addition to listing the contents, item by item, you'll also be asked by the insurance company to include the purchase date and cost. Having a document to refer to when required to complete a claim will make the process less stressful so you can get back to doing business in a much shorter timeframe.

Though disaster recovery is the main purpose for a personal property inventory, there are many other reasons to have a thorough listing and detailed photographs.

MOVING
So you've outgrown your current facility! Or you have been leasing and purchased a building. This is the perfect time to create your inventory. You'll have easy access to the model and serial numbers that are under or on the back of electronics and appliances.

Most likely, you're moving locally, so it's best to create the list after you unpack. You'll be able to identify the location where each item is being placed, which is the preferred format for insurance companies.

When moving out of town, or using a moving company to transport your contents, at least take the photos prior to departure. This will help back up any claim you might need to file if something is damaged, lost or missing.

STORAGE
Small businesses sometimes outgrow their building, but choose not to move. Therefore, if you have off-site storage, create an inventory of everything that is located elsewhere.

DISSOLUTION OF A PARTNERSHIP OR SELLING A BUSINESS
How do you know the value of your business without a complete, detailed list of all of your assets? Let's say you have 10 tables, each costing $80. That's $800, and most likely not on your depreciation schedule or any other document, for that matter. How many chairs, desks, lamps, etc., are owned by the business? To ensure that you are receiving a fair and equitable price for your business, compile an extremely detailed list of all of your assets.

PURCHASING A BUSINESS
A woman had recently purchased a restaurant. When asked if she had an inventory of its contents, her response was, "No, I have no clue what came with the restaurant; I trust my business broker." If you don't know how many tables, chairs, computers, printers and specific industry items (in this case, appliances, equipmetn, pots, pans, etc.) you have, how will you know if you paid a fair price? An itemized inventory of the contents is a document you should require.

Most small-to-medium sized business owners agree it is important, but few have this documentation. Reasons cited are that they and their employees are too busy, it takes too long, they don't know how, or realize they will not keep it up to date if they do create one.

If you are in one of these categories, seek the assistance of a professional to provide the service for you. Verify they are bonded and insured. In addition to the inventory service, the provider should also include secure back-up of your records and have a process in place to update your records annually. Without the updates, the report will be outdated very quickly.