Tag: Bookkeeping

  • What is online bookkeeping software: How to be Know

    What is online bookkeeping software: How to be Know

    Online bookkeeping software is a digital tool designed to simplify and streamline the process of managing financial transactions and records for businesses. It allows users to track income and expenses, manage invoices, monitor cash flow, generate financial reports, and perform other essential accounting tasks online.

    Understanding online bookkeeping software: Definition, Features, Pros, and Cons

    By utilizing cloud computing technology, it enables secure access to financial data from any device with an internet connection. It eliminates the need for manual data entry, reduces the risk of errors, and provides real-time insights into the financial health of a business. With features like automated bank feeds and integration with other business tools, it is a valuable asset for businesses of all sizes.

    What is online bookkeeping software How to be Know Image
    What is online bookkeeping software: How to be Know; Photo by Karolina Grabowska.

    Definition of online bookkeeping software

    Online bookkeeping software refers to web-based applications or tools that enable individuals or businesses to manage their financial records, transactions, and bookkeeping processes over the Internet. This type of software typically offers features such as expense tracking, invoicing, bank reconciliation, payroll management, financial reporting, and tax preparation.

    With online bookkeeping software, users can enter and organize their financial data, track income and expenses, generate financial reports, and collaborate with their accountants or team members remotely. This type of software is accessible from any device with an internet connection, allowing users to access, update, and monitor their financial information from anywhere at any time.

    It aims to simplify and automate bookkeeping tasks, save time, reduce errors, and provide businesses with accurate and up-to-date financial information for decision-making and reporting purposes. Additionally, it often integrates with other tools and services such as banking platforms, payment gateways, and third-party applications, further streamlining the financial management process.

    Features of online bookkeeping software

    They offer a range of features to simplify and streamline the financial management process for businesses. Some of the key features include:

    • Expense Tracking: They allow users to track and categorize expenses, making it easier to monitor spending and identify areas for cost-saving.
    • Invoicing: Users can create and send professional-looking invoices to clients or customers directly from the software. It often includes customizable templates, automated reminders, and the ability to accept online payments.
    • Bank Reconciliation: The software can automatically sync with bank accounts, credit cards, or other financial institutions. This feature helps reconcile transactions, identifying any discrepancies between the software records and the actual bank statements.
    • Financial Reporting: They provide various financial reports. Such as profit and loss statements, balance sheets, cash flow statements, and customizable reports. These reports provide valuable insights into the financial health of the business.
    • Payroll Management: Some of it offers payroll management features, allowing businesses to calculate and track employee wages, deductions, and tax withholdings. It may also facilitate the electronic filing of payroll taxes and provide year-end W-2s and 1099s.

    Additionally

    • Tax Preparation: They often integrate with tax preparation services or provide tax calculation features. It helps users stay organized and prepares them for tax season by categorizing income and expenses and generating necessary reports.
    • Data Security: It employs robust security measures to protect financial data. It often uses encryption, secure servers, and regular backups to ensure data integrity and prevent unauthorized access.
    • Integration with Other Tools: Many online bookkeeping software integrate with other business tools. Such as e-commerce platforms, payment gateways, CRM software, or project management tools. This integration simplifies data entry, reduces duplication, and streamlines workflows.
    • Collaboration: They allow multiple users to access and work on financial records simultaneously. Users can grant different levels of access to team members or accountants, facilitating collaboration and improving communication.
    • Mobile Access: Most online bookkeeping software offers mobile apps or responsive web interfaces. Allowing users to access financial data and perform essential tasks on the go using smartphones or tablets.

    10 best online bookkeeping software

    There are numerous online bookkeeping software options available, each with its features and benefits. Here are ten popular online bookkeeping software platforms:

    • QuickBooks Online: QuickBooks Online is a widely used bookkeeping software known for its user-friendly interface, robust features, and integration with other business tools.
    • Xero: Xero is another popular cloud-based accounting software that offers comprehensive bookkeeping features, including invoicing, expense tracking, and inventory management.
    • Zoho Books: Zoho Books provides small businesses with a range of bookkeeping features. Such as bank reconciliation, time tracking, and automated workflows. It also integrates with other Zoho business applications.
    • FreshBooks: FreshBooks is primarily aimed at freelancers and small service-based businesses. It offers invoicing, expense tracking, time tracking, and project management features.
    • Wave: Wave is a free online bookkeeping software that is suitable for small businesses and freelancers. It provides invoicing, expense tracking, and basic accounting functionality.

    Additionally

    • Sage Business Cloud Accounting: Sage offers scalable online bookkeeping software suitable for both small businesses and larger enterprises. It includes features like invoicing, inventory management, and financial reporting.
    • Kashoo: Kashoo is designed for small businesses and offers straightforward bookkeeping features like expense tracking, bank reconciliation, and invoicing.
    • Bench: Bench combines bookkeeping software with the services of a dedicated team of bookkeepers. It is a good option for businesses that prefer to outsource their bookkeeping needs.
    • FreeAgent: FreeAgent is a comprehensive accounting and bookkeeping software tailored for small businesses, freelancers, and contractors. It provides features such as expense tracking, invoicing, and tax management.
    • ZipBooks: ZipBooks is a user-friendly bookkeeping software that offers basic bookkeeping features like invoicing, expense tracking, and financial reporting. It also has a free plan available.

    These ten options represent a range of online bookkeeping software solutions with varying features, pricing plans, and target audiences. Consider your specific business needs and budget when selecting the most suitable one for you.

    Pros and Cons of online bookkeeping software

    Using online bookkeeping software has several advantages and disadvantages. Here are some pros and cons to consider:

    Pros:

    1. Time-saving: It automates many manual tasks. Such as data entry and report generation, saving you time and allowing you to focus on other aspects of your business.
    2. Accurate and up-to-date: With real-time data synchronization and automated bank feeds, they ensure that your financial information is always accurate and up-to-date, providing you with a clear picture of your business’s financial health.
    3. Increased accessibility: They can be accessed from any device with an internet connection. Allowing you to manage your financial records and collaborate with your team or accountant remotely, increasing flexibility and convenience.
    4. Improved collaboration: It enables multiple users to work on financial records simultaneously. Facilitating collaboration and improving communication between team members and accountants.
    5. Cost-effective: It eliminates the need for expensive hardware or IT infrastructure, reducing costs associated with traditional bookkeeping methods and providing a more affordable option for businesses of all sizes.

    Cons:

    1. Internet dependency: It relies on a stable internet connection to function effectively. If your internet goes down or becomes slow, it may hinder your ability to access and update your financial records.
    2. Learning curve: Switching to online bookkeeping software may require some time and effort to learn and adapt to the new platform. Training yourself or your team members on how to use the software effectively is essential.
    3. Data security concerns: Storing financial data online may raise concerns about the security and privacy of your information. However, reputable online bookkeeping software providers employ robust security measures to protect your data, such as encryption and regular backups.
    4. Limited customization: They may have limitations. When it comes to customizing features or reports to fit your specific business needs. You may need to find workarounds or make do with the available options.
    5. Dependence on third-party integrations: If you rely on integration with other business tools or services, the compatibility and reliability of those integrations may affect the overall functionality and user experience of the online bookkeeping software.

    Bottom line

    Online bookkeeping software is a digital tool that simplifies and streamlines the process of managing financial transactions and records for businesses. It allows users to track income and expenses, generate financial reports, manage invoices, and perform other accounting tasks online. With cloud computing technology, this software provides secure access to financial data from any internet-connected device. It eliminates manual data entry, reduces errors, and offers real-time insights into a business’s financial health. Some key features of online bookkeeping software include expense tracking, invoicing, bank reconciliation, financial reporting, payroll management, and tax preparation. It also ensures data security, integrates with other business tools, facilitates collaboration, and provides mobile access.

    Ten popular online bookkeeping software platforms are QuickBooks Online, Xero, Zoho Books, FreshBooks, Wave, Sage Business Cloud Accounting, Kashoo, Bench, FreeAgent, and ZipBooks. Using online bookkeeping software has pros such as time-saving, accuracy, accessibility, collaboration, and cost-effectiveness, but also cons like internet dependency, learning curve, data security concerns, limited customization, and dependence on third-party integrations. Considering specific business needs and budget is important for selecting the most suitable software.

  • Difference between a Ledger and a Journal with Table

    Difference between a Ledger and a Journal with Table

    A General Ledger and Journal Difference: The twofold section arrangement of accounting or double entry system of bookkeeping says that each exchange influences two records. There is an appropriate technique for recording each monetary exchange in this framework, called a bookkeeping cycle. The cycle begins from the journal followed by ledger, preliminary equilibrium, and last records. Accounting essay: Journal VS Ledger are the two columns that make the base for getting ready last records. The Journal is where all the exchanges record promptly when they occur which then characterizes and moves into the concerned record known as Ledger.

    Here is the article explain; Difference between a General Ledger and a General Journal with a Table.

    Journal otherwise calls the book of essential passage; which records exchanges in sequential request. Then again, Ledger, or also called the chief book infers a bunch of records wherein comparable exchanges, identifying with the individual, resource, income, obligation, or cost follow. In this article, we have assembled all the significant differences between general Journal vs Ledger in bookkeeping, in plain structure.

    As far as bookkeeping, the essential difference between the two is that the journal goes about as the underlying method of the section for all exchanges. The passages then arrange and gone into the ledger. Together the journal and the ledger help make a twofold section accounting record framework. From the start, it may seem like both a journal and a ledger fill a similar need, which causes it to seem like it may somewhat excess to keep both.

    Be that as it may, for reasons unknown, they are not actually something very similar. Truth be told, every one of them fills an alternate need, and the two of them are significant. Subsequently, it considers posing the inquiry; what precisely the difference is between them. Regarding bookkeeping, the essential difference between the two is that the journal goes about as the underlying method of passage for all exchanges. The passages then order and go into the ledger.

    A General Ledger and Journal:

    Together the journal vs the ledger help make a twofold passage accounting record framework. Subsequently, it very well may be said that both are similarly significant for successful accounting. At the point when the exchange initially happens, the section notes in the journal. The passages in the journal then gather and classify into five important bookkeeping things that incorporate costs, resources, incomes, liabilities, and capital. When ordered, they are then gone into the comparing part of the ledger. Each segment of bookkeeping thing, for example, costs, resources, and so forth has a two-sectioned, T-formed table.

    One side is the charges, while the other is the credits. Inside the ledger, the exchanges ought to in a perfect world adjust, for example, both charge and credit sections ought to have a relating passage. In many ledgers, the charge sections situate on the left half of the T-formed table, and credit passages situate on the right. Another difference between the two is that in the journal the sections note by the date of the exchange, though in the ledger the passages really note by class and sort of exchange.

    The journal goes about as a spot to simply note down the exchanges so they can sort and utilized later on; which would happen in the ledger. It tends to say that the journal is the primary draft, though the ledger the refine second draft. Nonetheless, it ought to note and because of the ascent in accounting programming, the utilization of journals and ledgers is diminishing. Today, the inclination is to utilize PCs and programming which computerize the errand of accounting, accordingly making this convoluted assignment very simpler.

    Meaning and Definition of Ledger:

    Ledger is a chief book that includes a bunch of records, where the exchanges move from the Journal. When the exchanges enter into the journal, at that point they group and posted into discrete records. Also, The arrangement of genuine, individual, and ostensible records where account shrewd portrayal record, knows as Ledger.

    While posting sections in the ledger, singular records ought to be opened for each record. The configuration of a ledger account ‘T’ forms having different sides of charge and credit. At the point when the exchange records on the charge side the word ‘To’ add, nonetheless, on the off chance that the exchange is to record on the credit side, at that point, the word ‘By’ utilize in the specific section alongside the record name.

    Toward the finish of the monetary year, the ledger account adjusts. For this reason, above all else, the aggregates of the different sides resolve, from that point forward, you need to ascertain the difference between the different sides. If the sum on the charge side is more than the credit side, at that point there is a charge balance, yet on the off chance that the credit side is higher than the charge side, at that point there is a credit balance. Assume if a record has a charge balance, at that point, you need to state “By Balance c/d” on the acknowledged side for the difference sum. Thusly, the two sides will count.

    Presently, toward the start of the new period, you need to move the initial equilibrium to the contrary side (for example On the charge side according to our model) as “To Balance b/d”. Here c/d alludes to conveyed down, and b/d methods cut down.

    Meaning and Definition of Journal:

    The Journal is an auxiliary daybook, where financial exchanges record unexpectedly, at whatever point they emerge. In this, the exchanges routinely record efficiently, so they can allude to later on. It features the two records which influenced by the event of the exchange; one of which charges and the other credits with an equivalent sum.

    A short note gives on the side of every passage; which gives a concise portrayal of the exchange, known as Narration. Also, The total cycle of recording the sections in the journal knows as Journalizing. It has five sections which are Date, Particulars, Ledger Folio, Debit, and Credit. A journal can be:

    • Single Entry: Entry having one charge and relating credit.
    • Compound Entry: Entry having one charge and more than one credit or passage having more than one charge for a solitary charge or at least two charges and at least two credits. On account of the compound section, it ought to remember that the absolute of charge and credit will count.

    Comparison or distinction between Journal and Ledger, Chat Table:

    Topic JournalLedger
    DefinitionJournal is a book of accounting where daily records of business transactions are first recorded in a chronological order i.e. in the order of dates.A ledger is an accounting book in which all similar transactions related to a particular person or thing are maintained in a summarized form.
    PurposeBookkeeping account book.Bookkeeping account book.
    DescriptionPrimary book of accounting or the book of original or first entry.Principal book of accounting or the book of final entry.
    EntriesIt prepares out of transaction proofs such as vouchers, receipts, bills, etc.It prepares with the help of a journal itself, therefore, it is the immediate step after recording a journal.
    Record keeping TypeIn chronological order, i.e. in the order of purchase, selling, etc.According to type/ category of transactions
    TransactionsAccount Transactions record in the journal without considering their nature of classification.  Account Transactions record in the ledger in the classified form under respective heads of accounts.
    BalanceA journal does not balance.Except nominal accounts all ledger accounts are balanced to find the net result.
    ProcedureThe procedure of recording in a journal is known as journalizing, which performs in the form of a Journal Entry.The procedure of recording in a ledger knows as posting.
    DivisionsIt may subdivide into a cash book, a sales daybook, sales return daybook, purchases daybook, purchases return daybook, B/R Book, B/P Book, Petty Cash Book.It may sub-divide into General ledger, debtors/sales ledger, creditors/purchases ledger.

    Journal VS Ledger:

    The difference between journal vs ledger can draw plainly on the accompanying grounds:

    • The Journal is where all the monetary exchanges are recorded unexpectedly, At the point when the exchanges are entered in the journal; at that point, they are posted into singular records known as Ledger.
    • The General Journal is an auxiliary book, while General Ledger is a chief book.
    • The Journal knows as the book of the unique section; however, Ledger is a book of the subsequent passage.
    • In the journal, exchanges are recorded in the sequential request; while in the ledger, exchanges are recorded in scientific request.
    • In the General Journal, the exchanges are recorded successively. Alternately, in General Ledger, the exchanges are recorded dependent on records.
    • Debit and Credit are sections in the journal; yet in the ledger, they are two inverse sides.
    • In the journal, a portrayal should be composed to help the passage. Then again, in the ledger, there is no prerequisite for portrayal.
    • Ledger records should adjust; however, the journal need not adjust.

    Conclusion or Summary or End:

    To start with, we discussed the method of recording an exchange. It includes a progression of activities like they are first recorded in the journal; from that point, they are arranged and assembled into discrete records and posted into the ledger; which is then moved to preliminary equilibrium, and toward the end, the last records are readied. These means give a base to set up the monetary records of an organization. If any of the above advances is missing, at that point; it is difficult to set up the last records.

    Difference between a General Ledger and VS a General Journal with Table Image
    Difference between a Ledger and a Journal with Table; Image from Pixabay.
  • What is Bookkeeping? Meaning and Definition!

    What is Bookkeeping? Meaning and Definition!

    Bookkeeping; The activity or occupation of keeping records of the financial affairs of a business. Book Keeper is the recording of financial transactions and is part of the process of accounting in business. Transactions include purchases, sales, receipts, and payments by a person or an organization or corporation. There are several standard methods of book-keeping. Such as the single-entry bookkeeping system and the double-entry bookkeeping system but, while they may be thought of as “real” book-keeping, any process that involves the recording of financial transactions is a bookkeeping process. Also learn, “The Language of Business” called Accounting, but Why?

    Learn, What is Bookkeeping? Meaning and Definition!

    It is usually performing by a bookkeeper. A bookkeeper (or book-keeper) is a person who records the day-to-day financial transactions of a business. They are usually responsible for writing the daybooks. Which contain records of purchases, sales, receipts, and payments.

    The bookkeeper is responsible for ensuring that all transactions whether it is a cash transaction or credit transaction are records in the correct daybook, supplier’s ledger, customer ledger, and general ledger; an accountant can then create reports from the information concerning the recording of the financial transactions by the bookkeeper.

    It refers mainly to the record-keeping aspects of accounting. They involve preparing source documents for all transactions, operations, and other events of the business. The bookkeeper brings the books to the trial balance stage: an accountant may prepare the income statement and balance sheet using the trial balance and ledgers prepared by the bookkeeper.

    History of Bookkeeping.

    The origin of book-keeping is lost in obscurity, but recent researches would appear to show that some method of keeping accounts has existed from the remotest times. Babylonian records have been finding dating back as far as 2600 B.C., written with a stylus on small slabs of clay.

    The term “waste book” was used in colonial America referring to book-keeping. The purpose was to document daily transactions including receipts and expenditures. This was recorded in chronological order, and the purpose was for temporary use only.

    The daily transactions would then record in a daybook or account ledger in order to balance the accounts. The name “waste book” comes from the fact that once the waste book’s data were transfers to the actual journal, the waste book could discard

    Meaning of Bookkeeping.

    Since the principles of accounting rely on accurate and thorough records, book-keeping is the foundation of accounting. Bookkeepers often have to exercise analytical skills and judgment calls. When recording business events since the source for most accounting information in the system.

    Book-keeping involves the recording, daily, of a company’s financial transactions. With proper bookkeeping, companies can track all information on their books to make key operating, investing, and financing decisions. Bookkeepers are individuals who manage all financial data for companies. Without bookkeepers, companies would not be aware of their current financial position, as well as the transactions that occur within the company.

    Accurate bookkeeping is also crucial to external users. Which include investors, financial institutions, or the government that needs access to reliable information to make a better investment or lending decisions. Simply put, the entire economy relies on accurate and reliable book-keeping for both internal and external users.

    Definition of Bookkeeping.

    Bookkeeping, often called record-keeping, is the part of accounting that records transactions and business events in the form of journal entries in the accounting system. In other words, book-keeping is how data is entering into an accounting system. This can either be done manually on a physical ledger pad or electronically in an accounting program like Quickbooks.

    “Systematic recording of financial aspects of business transactions in appropriate books of account”.

    Understand Bookkeeping for Example.

    A good example of a business event that requires analytical skills is the trade-in of a vehicle. The bookkeeper must review the transaction and determine how much the old vehicle trade-in value was and the price paid for the new vehicle. He or she must also find out whether any loans require for the new purchase and how much cash was paid for the transfer. Also read, Types of Accounting in a Business.

    As you can see, bookkeepers generally must have a good understanding of accounting principles and GAAP in general. Once the business event has been evaluating, the bookkeeper makes a journal entry in the general ledger to remove the old vehicle and associate accumulate depreciation and record. The purchase of the new vehicle with any applicable gains or losses on the transition.

    The entire process of analyzing an event and recording the transaction in the accounting system is a good example of bookkeeping. Many times accounting and book-keeping are using interchangeably, but this is incorrect. Accounting has a much more broad definition than simply recording transactions in an accounting system.

    Accounting is using to identify events that need to record, recording the transactions of these events, and communicating. The effects of these transactions with people inside and outside of the company. As you can see, it is only a small part of the broader definition of accounting.

    Importance of Bookkeeping.

    Proper book-keeping gives companies a reliable measure of their performance. It also provides information on general strategic decisions and a benchmark for its revenue and income goals. In short, once a business is up and running, spending extra time and money on maintaining proper records is critical.

    Many small companies don’t actually hire full-time accountants to work for them because the costs are usually higher. Instead, small companies generally hire a bookkeeper or outsource the job to a professional firm. One important thing to note here is that many people who intend to start a new business sometimes overlook it. The importance of trivial matters such as keeping records of every penny spent.

    What is Bookkeeping Meaning and Definition - ilearnlot
    What is Bookkeeping? Meaning and Definition!

    Reference

    1. What is it? History – //en.wikipedia.org/wiki/Bookkeeping
    2. Meaning, Importance – //www.myaccountingcourse.com/accounting-dictionary/bookkeeping
    3. Definition, Example – //corporatefinanceinstitute.com/resources/knowledge/accounting/bookkeeping/
    4. Photo Credit URL – //www.apatax.ca/wp-content/uploads/2017/11/accounting-and-bookkeeping-firm-surrey.jpg

  • What is a Business Plan?

    What Is a Business Plan?

    A business plan is a written statement that describes and analyzes your business and gives detailed projections about its future. A business plan also covers the financial aspects of starting or expanding your business—how much money you need and how you’ll pay it back.

    Writing a business plan is a lot of work. So why take the time to write one? The best answer is the wisdom gained by literally millions of business owners just like you. Almost without exception, each business owner with a plan is pleased she has one, and each owner without a plan wishes he had written one.

    Why Write a Business Plan?

    Why Write a Business Plan?
    Why Write a Business Plan?

    Here are some of the specific and immediate benefits you will derive from writing your business plan.

    Helps You Get Money

    most lenders or investors require a written business plan before they will consider your proposal seriously. Even some landlords require a sound business plan before they will lease you space. Before making a commitment to you, they want to see that you have thought through critical issues facing you as a business owner and that you really understand your business. They also want to make sure your business has a good chance of succeeding.

    In my experience, about 35% to 40% of the people currently in business do not know how money flows through their business. Writing a business plan with this book teaches you where money comes from and where it goes. Is it any wonder that your backers want to see your plan before they consider your financial request?

    There are as many potential lenders and investors as there are prospective business owners. If you have a thoroughly thought-out business and financial plan that demonstrates a good likelihood of success and you are persistent, you will find the money you need. of course, it may take longer than you expect and require more work than you expect, but you will ultimately be successful if you believe in your business.

    Helps You Decide to Proceed or Stop

    one major theme of the book may surprise you. It’s as simple as it is important. You, as the prospective business owner, are the most important person you must convince of the soundness of your proposal. Therefore, much of the work you are asked to do here serves a dual purpose. It is designed to provide answers to all the questions that prospective lenders and investors will ask.

    But it will also teach you how money flows through your business, what the strengths and weaknesses in your business concept are, and what your realistic chances of success are.

    The detailed planning process described in this book is not infallible—nothing is in a small business—but it should help you uncover and correct flaws in your business concept. If this analysis demonstrates that your idea won’t work, you’ll be able to avoid starting or expanding your business. This is extremely important. It should go without saying that a great many businesspeople owe their ultimate success to an earlier decision not to start a business with built-in problems.

    Let’s You Improve Your Business Concept

    Writing a plan allows you to see how changing parts of the plan increases profits or accomplishes other goals. You can tinker with individual parts of your business with no cash outlay. If you’re using a computer spreadsheet to make financial projections, you can try out different alternatives even more quickly. This ability to fine-tune your plans and business design increases your chances of success.

    For example, let’s say that your idea is to start a business importing Korean leather jackets. Everything looks great on the first pass through your plan. Then you read an article about the declining exchange ratio of U.S. dollars to Korean currency. After doing some homework about exchange rate fluctuations, you decide to increase your profit margin on the jackets to cover anticipated declines in dollar purchasing power. This change shows you that your prices are still competitive with other jackets and that your average profits will increase. And you are now covered for any likely decline in exchange rates.

    Improves Your Odds of Success

    one way of looking at business is that it’s a gamble. You open or expand a business and gamble you’re and the bank’s or investor’s money. If you’re right, you make a profit and pay back the loans and everyone’s happy. But if your estimate is wrong, you and the bank or investors can lose money and experience the discomfort that comes from failure. (of course, a bank probably is protected because it has title to the collateral you put up to get the loan.)

    Writing a business plan helps beat the odds. most new, small businesses don’t last very long. And, most small businesses don’t have a business plan. Is that only a coincidence, or is there a connection between these two seemingly unconnected facts? my suggestion is this: let someone else prove the connection wrong. Why not be prudent and improve your odds by writing a plan?

    Helps You Keep on Track

    many business owners spend countless hours handling emergencies, simply because they haven’t learned how to plan ahead. This book helps you anticipate problems and solve them before they become disasters.

    A written business plan gives you a clear course toward the future and makes your decision making easier. Some problems and opportunities may represent a change of direction worth following, while others may be distractions that referring to your business plan will enable you to avoid. The black and white of your written business plan will help you face facts if things don’t work out as expected. For example, if you planned to be making a living three months after start-up, and six months later you’re going into the hole at the rate of $100 per day, your business plan should help you see that changes are necessary. It’s all too easy to delude yourself into keeping a business going that will never meet its goals if you approach things with a “just another month or two and I’ll be there” attitude, rather than comparing your results to your goals.

    Issues Beyond the Plan

    I have written this book to provide you with an overview of the issues that determine success or failure in a small business. Experienced lenders, investors, and entrepreneurs want a plan that takes these issues into account. of course, this book can’t cover everything. Here are some of the key business components that are left out of this initial planning process.

    Bookkeeping and Accounting

    This book discusses the numbers and concepts you as the business owner need to open and manage your small business. You have the responsibility to create bookkeeping and accounting systems and make sure they function adequately. One of the items generated by your

    accounting system will be a balance sheet. A balance sheet is a snapshot at a particular moment in time that lists the money value of everything you own and everything you owe to someone else.

    Taxes

    While there are a few mentions of tax issues throughout the book, most of the planning information doesn’t discuss how taxes will be calculated or paid. The book focuses its efforts on making a profit and a positive cash flow. If you make a profit, you’ll pay taxes and if you don’t make a profit, you’ll pay fewer taxes. A cPA or tax advisor can help you with tax strategies.

    Securities Laws

    If you plan to raise money by selling shares in a corporation or limited partnership, you’ll fall under state or federal securities regulations. You can, however, borrow money or take in a general partner without being affected by securities laws. A complete discussion of these issues is beyond the scope of this book. For now, take note that you must comply with securities regulations after you complete your plan and before you take any money into your business from selling shares or partnership interests.

    Your Management Skill

    This book shows you how to write a very good business plan and loan application. However, your ultimate success rests on your ability to implement your plans—on your management skills. If you have any doubts about your management ability, check out the resources other article. Also see another posts for a thought-stimulating discussion of management.

    Issues Specific to Your Business

    How successfully your business relates to the market, the business environment, and the competition may be affected by patents, franchises, foreign competition, location, and the like. of necessity, this book focuses on principles common to all businesses and does not discuss the specific items that distinguish your business from other businesses. For example, this post doesn’t discuss how to price your products to meet your competition; I assume that you have enough knowledge about your chosen business to answer that question.