Once a business owner has registered a legal entity, an immediate duty under the Accounting Act B.E. 2543 is to organize the accounting system and manage company assets.
Fixed assets—buildings, machinery, vehicles, and office equipment—are not only business tools; they are important items in the statement of financial position and affect the profit and loss statement through depreciation.
1. Asset Register and Accounting Records
From the registration date, a legal entity must maintain journals, ledgers, and goods/asset accounts. Effective asset management begins with an Asset Register showing each asset’s details, acquisition date, cost, and location.
Failure to maintain correct accounts may result in statutory fines.
2. Accounting Depreciation
For accounting, depreciation allocates the cost of a fixed asset as an expense over its useful life in accordance with the matching principle. A business may use a method that reflects actual use, such as the straight-line method.
3. Tax Depreciation
For tax, depreciation must follow Revenue Department rules, which may differ from accounting in rates and periods. Tax depreciation is an operating expense deducted from income to calculate taxable net profit.
| Point | Accounting depreciation | Tax depreciation |
|---|---|---|
| Basis | Accounting standards (matching principle) | Revenue Code / Revenue Department |
| Rate and period | Actual useful life | Statutory rates |
| Purpose | Reflect actual profit in the statements | Calculate taxable net profit |
For an SME (paid-up capital not exceeding 5 million baht and revenue not exceeding 30 million baht), correct depreciation is especially important because net profit is taxed progressively: the first 300,000 baht of profit is exempt, with a lower rate on the excess.
Depreciation claimed above statutory limits may be added back by Revenue officers, resulting in additional tax.
4. Retaining Supporting Evidence
The key evidence of asset value is the original document, such as a purchase tax invoice or receipt. These documents must be retained securely at the head office for at least 5–7 years for inspection.
Digital systems such as PEAK Asset can help manage records, but paper originals must still be retained unless specific approval is obtained.
Business-owner advice: an asset-management system linked to online accounting software automates accounting and tax depreciation, reduces confusion in annual net-profit adjustments, and helps the CPA or TA audit the statements faster.
Note: annual depreciation percentages for each asset type (for example, buildings 5% and machinery 20%) are Revenue Code rules and may change. Consult your accounting firm for the latest statutory rates.
Need an asset register and correct accounting and tax depreciation? View Maitrichit’s accounting services or contact us for a consultation.