How Raising Capital Impacts Your Financial Statements

Businesses need money to operate and unless your business has retained some earnings to draw from, you might need to go out and raise capital. Although there are complexities that blur the lines, you can broadly think of all capital as falling into two categories:

• Loan-based funding
• Ownership-based funding

Loan-based funding includes borrowing money from the bank or offering a bond or promissory note to private lenders. Ownership-based funding is essentially where you sell a piece of the ownership in the company as a share or stock. You’re probably already familiar with these concepts. But what I want to talk about in this blog post is how each type of funding impacts your financial statements. Knowing this will help inform you about the best choice for your situation when it comes time to raise some capital.

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Tags: Balance Sheet, Best Choice, Borrowing Money, Cash Flow Statement, Complexities, Creditor, Debt Repayment, Dividends, Financial Statements, Income Statement, Liabilities, Liability Side, Net Profit, Operating Expenses, Private Lenders, Proceeds, Promissory Note, Selling Shares, Share Issues, Shareholders

Transform Your Business With Spreadsheet Accounting – Part 3

In the first blog post in this series I introduced you to the 3 key spreadsheets that every business needs and I gave you a really quick-and-dirty way to set up the three spreadsheets in one Excel file. In the second blog post in this series, I talked about the relationship between all three spreadsheets.

I’m realistic enough to realize that financial statements can seem complex and unwieldy at the best of times, which I’ve been walking you slowly through the details that I felt you needed to know. And I was planning to show you how to build the three spreadsheets yourself. But I’ve got good news for you: In the last blog post of this series, I’m going to make it really easy for you! I’m going to link you to one free file that you can download that will GIVE you all three spreadsheets in a single Excel file. Here’s how to get it and use it:
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Tags: Balance Sheet Income Statement, Business Accounting, Business Guide, Business Owners, Cash Flow Statement, Consolidated Report, Decisions, Financial Spreadsheets, Financial Statements, Free File, Microsoft, Microsoft Excel, Microsoft Office, Relationship, Report Template, Spreadsheet, Step 1, Template Section

Transform Your Business With Spreadsheet Accounting – Part 2

In a previous blog post I showed you a way to put together a single file consisting of your three most important financial reports – the reports that every business should have.

I’ll be talking to you over the next couple of blog posts about these spreadsheets and how to put them together but in this post I want to pause momentarily to talk to you about the all-important question of WHY.

Why do we need those three financial reports? When we answer that question, understanding HOW the spreadsheets work falls naturally into place.
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Tags: Analogies, Balance Sheet, Balance Sheets, Business Accounting, Cash Flow Statement, Connect One, Countryside, Cows, Exact Time, Fence Posts, Film Strips, Filmstrips, Financial Information, Financial Statements, Income Statement, Intervals, Single File, Spreadsheet, Spreadsheets, Time Period, Wooden Fence

Transform Your Business With Spreadsheet Accounting – Part 1

When a new client approaches me to do their accounting for them, they often bring in their previous financial “system”… which usually consists of cardboard box overflowing with files, receipts, envelopes, and notebooks of spreadsheets. The first thing I do, before I start any official “help-them-save-money-and-make-more-money” accounting work, is to roll up my sleeves and systematize the avalanche of papers.

If your small and growing business doesn’t have an accountant yet, or if you want to make it really fast for your accountant to get through your records and start delivering the meaningful insight that you are hiring them to provide, you need to build and implement a spreadsheet-based accounting system as early as possible.

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Tags: Accountant, Accountants, Accounting System, Avalanche, Business Profitability, Cardboard Box, Cash Flow Statement, Envelopes, Google, Google Spreadsheets, Gross Profit, Income Statement And Balance Sheet, Meaningful Insight, Microsoft Excel, Profit And Loss, Profit And Loss Statement, Receipts, Spreadsheet, Step 2, Step 3