My Business Guide

As you consider which legal entity or entities--corporation, limited liability company, or limited partnership--you want to use for your business structure, the decisions you make will depend heavily on your current financial situation, both personal and professional. But do you know how to read a financial statement on your own? Do you know how to read your own personal and business financial statements?

Business Home Internet Knowing how to do this is an essential skill not just for entrepreneurs but for everyone. However, for the entrepreneur having this skill can mean the difference between having a thriving business that continues to thrive and winding up in bankruptcy. The annals of the bankruptcy courts are strewn with cases of entrepreneurs who entrusted their accounting to others and, not knowing how to read the financial statements of their own businesses, were surprised when they found that the business was ultimately unsustainable. The purpose of this article is to help prevent this from happening to you--and to arm you with the skills you need to structure your business to your benefit from the outset.

Your financial plan should contain your projected financial statements – Balance Sheet, Income Statement, and Statement of Cash Flows – for the next year (minimum) to three years (ideal). If you’ve been operating the business, you should also provide any historical financial statements on your results to date. While many business owners rightly decide to let accountants or consultants help to develop their projected financial statements, they cannot be accurate and useful without the participation of the business owner.

Business Mlm Opportunity Your Two Major Financial Statements

Each member shall in the judgment of the Board of Directors have the ability to read and understand the Company's financial statements.

Based Business Home Income There are two major financial statements that every entrepreneur should know how to read and (ideally) prepare or have prepared in their financial software (we recommend QuickBooks):

Issuing, applying for, acquiring, Applying for, acquiring, The information, products, service and any general advice in this Web site do not take into account your personal objectives, financial situation or needs. Before trading in the products, you should read the Product Disclosures Statement and the Financial Services Guide and be satisfied that any trading you undertake in relation to those products is appropriate in view of your objectives, financial situation and needs.

Based Business Home Internet The Income Statement
The Income Statement (also known as the P&L or Profit and Loss Statement) offers a dynamic picture of the ebb and flow of your finances. Briefly, income statement shows first: A. Your various sources of income Then subtracts from that, B. Your expenses To give you the net result: Net Profit or Loss Typically, it is the result shown on this statement that is the basis for your taxation by state and federal authorities at the end of the year. The net income or loss (revenue outgo) is carried over onto your second major financial statement: The Balance Sheet.

- Personal financial statements, showing the borrower's personal net worth (assets less debt) and estimated annual income A lender will not make a loan without knowing the personal financial strength of the borrower. After all, in the world of especially small businesses, the owner is the business. To evaluate capital, the lenders looks at equity investment of the owners in the business. The more equity the better.

Business Homebased Opportunity The Balance Sheet
Offers you a snapshot of cumulative results of your financial activities. It is made up of two columns:
On the left side you have your Assets

Loan amount (£) - - Articles Finance Articles From Shakespeare Finance Business Funding to Bridge Your Temporary Financial Shortfalls Do you know that you can easily become a successful businessman The liberal financing policies and goal to uplift the overall economy within the nation, the government funding and other financial agencies operating in the UK with different financial portfolios have designed various funding schemes especially for the intending entrepreneurs. This enables every individual who is keen enough to either start his own business or develop and expand his already existing business enterprise. The scope being offered is ample now and it is entirely upto the intending individual to seek the required funds for running or managing his show. Bridging the short term financial gap or even a long term capital need is being taken care of for the worthy citizens of the UK!

Based Business Home Mlm On the right are listed your Liabilities and Owners/Shareholders Equity (or ownership in the business). The two columns must be in balance, which is why this is called a Balance Sheet.

Business New Opportunity Assets=Liabilities + Equity

Business Home Online It's really quite logical how the Income Statement and Balance Sheet relate to one another.

Best Business Home Opportunity If you have to use current or long-term assets to pay ongoing expenses during the current year, at the end of the year, the amount of your assets will be reduced by the amount of net loss. On the right hand side, your Equity has gone down too. If you borrowed, say $10,000 to pay current operating expenses, at year end, your assets remain the same, but your liabilities have increased by $10,000, lowering your net Equity or ownership in the company by that same $10,000.

Business Investment It doesn't take a rocket scientist to figure out that if you continue on this path, you will quickly be in a very painful situation, because Liabilities carry their own cost. The cost of borrowing money is Interest, and if you are fortunate enough to borrow at only 10% interest (on unsecured debt) today, a year from now, you will have to pay $11,000 to pay off the original $10,000 debt. This reduces your equity still further--unless you have used the borrowed funds to create more assets that increase in value at the same rate as the interest on your debt or, better yet--at a higher rate.

Business Home Making Money More to the point for deciding which business entities to use is that you need to work out both your personal financial statements and those of your business(es). If you find, for example, that that you have significant salary or wage income in your personal financial statements that is causing you to pay out high taxes (as reflected in your balance sheet), and you expect that your business will generate some significant losses for the first several years, it would be advantageous to you to use a business entity that is a flow-through entity. Losses incurred by your S-Corporation (or, if you prefer, your Limited Partnership or your Limited Liability Company) will flow onto your personal balance sheet to offset the salary or wage income and thus reduce your tax liability.

Based Business Free Home Moreover, in general, if you want to draw up a roadmap to getting where you want to go, you need to know your point of departure. Thus, preparing and understanding your personal and business financial statements is an indispensable first step for your business planning.

Business Internet Online ©Copyright Azur Pacific Associates 2006

Best Business Opportunity Germaine A. Hoston, Ph.D. is President and Treasurer of Azur Pacific Associates, a consulting and translation firm and distributor of the Secret Millionaire Asset Security System and Eventis wealth-building courses. Get a free gift when you sign up for her free wealth structuring eNewsletter for entrepreneurs at: http://www.wealthstrategies202.com.

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