Non-operating assets are assets that your business owns that aren’t used to produce goods or services.
Assets are valuable things that your business owns. Assets can be divided into many categories, such as current assets, non-current assets, liquid assets, fixed assets, intangible assets, and operating assets.
Examples of non-operating assets are empty buildings, vacant lots or unused equipment.
Understanding non-operating assets
Non-operating assets might be assets that you’re intending to convert to operating assets. For example if you’re planning to convert an empty building into a shop or an office, or building a warehouse on an empty lot.
However, until the asset is in use it’s referred to as a non-operating asset. Non-operating assets can be considered redundant assets, since they’re not essential for the products or services you sell. As such, they’re expendable, and if you need to improve the liquidity of your business, you can easily decide to sell a non-operating asset.
It’s not good to have too many non-operating assets. Your money is tied up in things that ultimately don’t contribute to your bottom line. Although, that being said, the property or lot or other type of non-operating asset could increase in value over time, so that holding onto it might mean you get more money back.
Non-operating versus operating assets
Unlike non-operating, operating assets are used in the creation of goods and services, in fact they’re essential. What your operating assets are depends on what type of business you run. If you’re a consultant, a work laptop would be an operating asset, if you make goods, then manufacturing machines and your inventory count as operating assets.
It can be difficult to categorise assets: A non-operating asset can be included in several categories, such as a non-current asset, fixed asset and an intangible asset. An operating asset can be current, non-current, fixed, variable, and intangible.
If you want help understanding or managing your assets, you can speak to an accountant.