One of the biggest differences between a business owner and an employee is that an employee is building an asset for someone else, the company owner, while the business owner is building an asset for him or herself. If you’re building an asset, at some point you’ll want to know how much it’s going to [...]
There are five terms you need to know when it comes to your Income Statement: Cost of Goods Sold are direct costs. The expenses are directly associated with the sales. If you sell a product, these are the costs associated directly with that product. General & Administrative costs are indirect costs. These are expenses that [...]
Do you ever get tired of making decisions with not enough information? If so, you’re going to love today’s article. Here’s how you can make quicker business decisions that are more likely to work out. Your business is talking to you right now. Your business has one purpose: to make money. And the financial statements [...]
Key Performance Indicators, also known as KPI or Key Success Indicators, allow a business to focus on the most powerful leverage points in their business. The KPI are quantifiable and measurable and will vary from business to business. There are three types of KPI under the most simplified plan: #1. Numbers. This refers to just [...]
The term ‘break-even’ refers to the point at which the income covers the expenses. For example, you may have overhead expenses before you can even make a dime of profit. That might include rent, utilities, Internet, salaries and the like. Those expenses are considered General & Administrative or indirect costs. Let’s say you are in [...]
In the CPA world, we call this method “shoebox accounting.” You know what I’m talking about. You throw all your receipts in a box and a few times during the year, you pull it out and vow to spend the weekend getting it caught up. But the weekend comes and goes and it never does [...]
There are two big reasons why you need to have good bookkeeping. #1 You’ll make more money. #2: You’ll pay less tax. And then there are plenty of other reasons, such as: #3 You’ll have a whole lot less stress, knowing exactly what is going on with your business. #4 You’ll be able to spot [...]
If you don’t know how to (or don’t read) your financial statements, you might as well not have them. Well, you do need to have financial statements for your year-end tax return. But even with all that, the financial statements aren’t perfect. There are some fatal flaws built into the way we currently do accounting. [...]
Cash flow is the lifeblood of your business, and also the most misunderstood part of business by many business owners. Here are five common myths regarding the Cash Flow Cycle. Cash Flow Myth #1: If there’s cash in the bank, everything is fine. Use your statement of cash flow to find out why there is [...]
Which way is your cash flow going? When you understand that, you’ve gone a long way in determining what the future for your business and your investments are. Let’s start by looking at the cash flow cycles of the poor, middle class and rich. So we’re going to look at what creates a poor, middle [...]
