Accounting for Bad Debts

One of the unfortunate issues that companies need to deal with at year-end is accounting for bad debts. Bad debts are not an issue for a company that operates on a cash basis; if you haven’t collected the money, then it isn’t included in your income. For companies that keep their books on an accrual basis, however, it is an important part of their year-end process, since you book your revenue as it occurs or is billed out, not when you receive payment. Read More »

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Startup Capital: How Much Do I Need?

The necessary amount of capital required to start a business varies from one venture to the next as far as clean, net dollars are concerned. Each venture is unique unto itself and only you, the business owner and author of the business plan, may have the most accurate grasp of what you’ll need to get off and running. The amount you’ll need will hinge largely upon the scope of your business as you project it within its first year of life. Read More »

Tags: Accountants, Accounting Fees, Budget, Business Owner, Business Person, Business Plan, Coffers, Daily Basis, Expense Plan, First Years, Grasp, Investors, Monies, Obligation, Office Supplies, Receivables, Salaries, Scope, Six Months, Startup Capital

Selling the Bank

At some stage in your entrepreneurial career it is a given that you’re going to have to develop a relationship with a financial institution, a bank. Whether your financial need lies in necessary start-up costs or taking the pangs away from a stalled cash flow due to slow-turning receivables, having a financial backer to assist you is a necessary evil in small business survival. While the bank doesn’t pose as a potential customer, you may find that selling a banker on your ideals is the toughest sale you’ll ever have to make. Read More »

Tags: Bear In Mind, Best Time, Business Survival, Cash Flow, Commercial Presence, Community Bank, Comprehensive Business Plan, Depositor, Depositors, Distrust, Financial Backer, Financial Institution, Good Faith, Local Community, Minimal Risk, Necessary Evil, New Business, Pangs, Receivables, Start Up Capital

Are You Running Blind? Use This Tool to Peer Into the Future

No, we’re not recommending that you purchase a crystal ball. But there are some tools you can use to help you run your business with foresight instead of hindsight. One of the best tools is to develop a cash flow projection report. Read More »

Tags: Accounts Receivable, Annual Insurance, Best Case Scenario, Best Tools, Cash Flow Projection, Cash Flow Projections, Cash Flow Report, Cash Position, Conservative Side, Crystal Ball, Current Sales, Foresight, Future Sales, Highs And Lows, Hills And Valleys, Hindsight, Insurance Audit, Pay Increases, Payables, Receivables

Cash Basis Accounting: The Missing Numbers

Cash basis accounting is used by a large percentage of small businesses. It is used because it is simple to understand and requires very basic record keeping skills to maintain. It also allows a company to pay taxes based only on revenues collected rather than on the full amount of revenues billed.

In cash basis accounting, deposits from sales or services are recorded as revenue. Checks and other forms of outgoing cash are recorded either as cost of goods sold or operating overhead expense. The net results determines the company’s profit or loss. A very simple system, as stated above.

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Tags: Bank Accounts, Cash Balance, Cash Basis Accounting, Cash Position, Checks, Critical Number, Current Assets, Desperate Need, Financial Position, Financial Statements, Overhead Expense, Payables, Point In Time, Profit And Loss, Profit And Loss Statement, Profitability, Receivables, Relationship, Small Businesses, Vendor Invoices