Tag: Taxes

  • What does Income Tax mean? Introduction, Meaning, and Definition

    What does Income Tax mean? Introduction, Meaning, and Definition…Waiting for best or correct answers.

  • Public Revenue: Introduction, Meaning, Definition, Sources, and Classification

    Public Revenue: Introduction, Meaning, Definition, Sources, and Classification

    What does Public Revenue mean? Public revenue money receives by a Public. The article on Public Revenue: Introduction, Meaning, Definition, Sources, and Classification. Each explains as, Introduction to Public Revenue, Meaning of Public Revenue, Definition of Public Revenue, Sources of Public Revenue, and Classification of Public Revenue. It is an important tool for the fiscal policy of the Public and is the opposite factor of Public Spending.

    Here are explain the Concept of Public Revenue; their key points – Introduction, Meaning, Definition, Sources, and Classification.

    By Wikipedia; Revenues earned by the government are received from sources such as taxes levied on the incomes and wealth accumulation of individuals and corporations and the goods and services produced, exports and imports, non-taxable sources such as government-owned corporation’s incomes, central bank revenue and capital receipts in the form of external loans and debts from international financial institutions. It is used to benefit the country.

    Governments use the revenue to better develop the country, to fix roads, build homes, fix schools, etc. The money that the government collects pays for the services that are provided for the people. The public sector in three concepts very important, Public Finance, Public Expenditure, and Public Revenue.

    Introduction to Public Revenue:

    Governments (Public) need to perform various functions in the field of political, social & economic activities to maximize social and economic welfare. To perform these duties and functions, the government requires a large number of resources. The revenues from different sources received by the government call public revenues. Some regularly collect whereas some irregularly collect.

    These resources call Public Revenues. Public revenue consists of taxes, revenue from administrative activities like fines, fees, gifts & grants. Revenues are not repayable. Some of them are obtained from the sale of public utilities whereas some are obligatory payments to the government.

    Meaning and Definition of Public Revenue:

    The income of the government through all sources calls public income or public revenue.

    According to Dalton, however, the term “Public Income” has two senses — wide and narrow. In its wider sense, it includes all the incomes or receipts which a public authority may secure during any period. In its narrow sense, however, it includes only those sources of income of the public authority which are ordinarily known as “revenue resources.” To avoid ambiguity, thus, the former is termed “public receipts” and the latter “public revenue.”

    As such, receipts from public borrowings (or public debt) and the sale of public assets are mainly excluded from public revenue. For instance, the budget of the Government of India is classified into “revenue” and “capital.” “Heads of Revenue” include the heads of income under the capital budget are termed as “receipts.” Thus, the term “receipts” includes sources of public income that are excluded from “revenue.”

    There are both rev­enue receipts and capital receipts. Revenue receipts are derived from taxes of different forms. Capital receipts include primary inter­nal market borrowing and also external loans. However, the bulk of state revenue comes from internal sources. The major point of dis­tinction between the two is that while the former has the receipts or earnings of the people as the source, the later has the public prop­erty as the source.

    Sources of Public Revenue:

    The following key points highlight the two main sources of public revenue from India.

    • Tax Revenue, and.
    • Non-Tax Revenue.

    Now, explain;

    A] Tax Revenue:

    Taxes are the first and foremost sources of public revenue. It is compulsory payments to the government without expecting direct benefit or return by the taxpayer. Taxes collected by Government are used to provide common benefits to all mostly in the form of public welfare services. They do not guarantee any direct benefit for the person who pays the tax. It is not based on a direct quid pro quo principle.

    Features of Tax Revenue:

    The main characteristic features of a tax are as follows:

    • A tax is a compulsory payment to pay by the citizens who are liable to pay it. Hence, the refusal to pay a tax is a punishable offense.
    • There is no direct, quid pro quo between the tax-payers and the public authority. In other words, the taxpayer cannot claim reciprocal benefits against the taxes paid. However, as Seligman points out, the state has to do something for the community as a whole for what the taxpayers have contributed in the form of taxes. “But this reciprocal obligation on the part of the government is not towards the individual as such, but towards the individual as part of a greater whole.
    • A tax is levied to meet public spending incurred by the government in the general interest of the nation. It is a payment for an indirect service to make by the government to the community as a whole.
    • A tax is payable regularly and periodically as determined by the taxing authority.

    Taxes constitute a significant part of public revenue in modern public finance. Taxes have macro-economic effects. Taxation can affect the size and mode of consumption, the pattern of production and distribution of income and wealth. Progressive taxes can help in reducing inequalities of income and wealth by lowering the high-income group’s disposable income.

    Disposable income is meant the income left in the hands of the taxpayer for disbursement after-tax payment. Taxes imply a forced saving in a developing economy. Thus, taxes constitute an important source of development finance.

    Types of Tax Revenue:

    The following types below are;

    1] Union Excise Duties:

    They are, presently, by far the leading source of revenue for the Central Government and are levied on commo­dities produced within the country, but exclu­ding those commodities on which State excise is levied (viz., liquors and narcotic drugs). The most important commodities from the revenue point of view are sugar, cotton, mill cloth, tobacco, motor spirit, matches, and cement.

    2] Customs:

    Customs duties include both import and export duties. These are the second-most important source of revenue for the Central Government.

    3] GST Tax:

    Goods and Services Tax is an indirect tax levied in India on the supply of goods and services. GST levies at every step in the production process but is meant to refund to all parties in the various stages of production other than the final consumer.

    India’s biggest indirect tax reform in the form of Goods and Services Tax (GST) has completed plus 1 year. A comprehensive dual GST was introduced in India from 1 July 2017.

    4] Income Tax:

    Income tax is at present another important source of revenue for the Central Government. It levies on the incomes of individuals, Hindu undivided families, and unregistered firms.

    5] Corporation Tax:

    The income-tax on the net profits of joint-stock companies calls corporation tax.

    6] Wealth Tax:

    It is an annual tax on the net wealth of individuals and Hindu undivided families. It is a progressive tax.

    7] Gift Tax:

    It is a tax on gifts of property by an individual in his lifetime to future succe­ssors.

    8] Capital Gains Tax:

    It applies to capital gains resulting from the sale, exchange or transfer of capital assets.

    9] Hotel Expenditure Tax:

    Recently, a new tax has been levied on those who patronize high-class hotels.

    10] Tax on Foreign Travel:

    Another new tax levied on foreign travel for conserving foreign exchange as well as to raise revenue.

    B] Non-Tax Revenue:

    The revenue obtained by the government from sources other than the tax calls Non-Tax Revenue. Public income received through the administration, commercial enterprises, gifts, and grants is the source of non-tax revenues of the government.

    The following sources of non-tax revenue below are:

    1] Interest Receipts:

    This largest non-tax source of Central Government’s revenue receipts is the interest it earns mainly on the loans it has advanced to State Governments, to financial and industrial enterprises in the public sector.

    2] Surplus Profits of the Reserve Bank of India (RBI):

    The surplus profits of the RBI is also a part of the revenues of the Central Government. In recent years, these have been quite substantial because of the large borro­wing by the Government from the RBI against Treasury Bills for financing the Five-Year Plans.

    3] Currency, Coinage, and Mint:

    The Govern­ment also derives income from running the Currency Note Printing Presses. Moreover, profits are made from the circulation of coins — this profit is the difference between the face value of the coins and their manu­facturing cost.

    4] Railways:

    The railways in India are owned and run by the Government of India. Accor­dingly, they pay a fixed dividend to general revenues, i.e., to the Central Government, on the capital invested in the railways. Besides, a part of the net profits made by the railways is also payable to the Central Government.

    5] Profits of Public Enterprises:

    Public enter­prises owned by the Central Government, e.g., the Steel Authority of India (SAIL), Hindustan Machine Tools (HMT), Bharat Heavy Electricals Ltd. (BHEL), State Trading Corporation (STC). The profits of such Public Sector Units (PSUs) are another source of revenue for the Government of India.

    6] Other Non-Tax Sources of Revenue:

    The main source among them is the Departmental Receipts of the various ministries of the Cen­tral Government by way of fees, penalties, etc.

    Public Revenue Introduction Meaning Definition Sources and Classification
    Public Revenue: Introduction, Meaning, Definition, Sources, and Classification, #Pixabay.

    Classification of Public Revenue:

    A scientific classification enables us to know in what respects these various sources resemble one another and in what ways they differ. Different economists have classified the sources of public revenue differently. Of the various classifications of public revenue available in economic literature, we shall review a few important ones.

    1. Taylor’s Classification:

    The most logical and scientifically based classification of public revenue is however provided by Taylor. He divides public revenue into four categories:

    • Grants and gifts.
    • Taxes.
    • Administrative revenues, and.
    • Commercial revenues.

    Now, explain;

    Grants and gifts:

    Grants-in-aid are how one government provides financial assistance to another to enable it to perform certain specified functions, for example, education and health grants made to the states by the central government.

    Grants-in-aid are the cost payments made by the grantor government and revenue receipts to the grantee, and no obligation of repayment involves. Gifts are voluntary contributions from individuals or institutions for specific purposes. Grants and gifts are voluntary and there is the absence of quid pro quo to the donor.

    Taxes:

    These are compulsory payments made to the government without expecting a direct return of benefits. The taxes involve varying degrees of coercive powers.

    Administrative Revenues:

    Under this group, fees, licenses, fines, and special assessments include. Most of these are voluntary and based upon the direct benefits accruing to the payer. They generally arise as a by-product of the administrative or control function of the government.

    Commercial Revenues:

    These are the receipts by way of prices paid for government-produced goods and services. Under this group, postal charges, tolls, interest on loans of state financial institutions or nationalized banks, tuition fees of public educational institutions include.

    2. Dalton’s Classifications:

    Dalton provides a very systematic, comprehensive and instructive classification of public revenue. In this opinion, there are two main sources of public revenue — taxes and prices. Taxes pay compulsorily whereas prices pay voluntarily by individuals, who enter into contracts with the public authority. Thus, prices are contractual payments.

    Taxes are sub-divided into:
    • Taxes in the ordinary sense.
    • Tributes and indemnities.
    • Compulsory loans, and.
    • Pecuniary penalties for offenses.
    Prices are sub-divided into:
    • Receipts from public property passively held such as rents received from the tenants of public lands.
    • Receipts from public enterprises charging competitive rates.
    • Fees or payments charged for rendering administration services, such as birth and death registration fees, and.
    • Voluntary public debt.

    These two groups must add to another group to make the classification exhaustive. Under this group, the following items include:

    • Receipts from public monopolies, charging higher prices.
    • Special assessments.
    • The issue of new paper money or deficit financing, and.
    • Voluntary gifts.

    3. Seligman’s Classification:

    Seligman classifies public revenue into three groups:

    • Gratuitous revenue.
    • Contractual revenue, and.
    • Compulsory revenue.

    Now, explain;

    Gratuitous revenue; comprises all revenues such as gifts, donations, and grants received by the public authorities free of cost. They are entire of a voluntary nature. Further, these are very insignificant in the total revenue.

    Contractual revenue; includes all those types of revenue which arise from the contractual relations between the public authority and the people. Fees and prices fall into this category. A direct quid pro quo is usually present in these types of revenue.

    Compulsory revenue; includes the income derived by the state from administration, justice, and taxation. Taxes, fines, and special assessments regard as compulsory revenue. These revenues express an element of state sovereignty. It is the most significant type of public revenue in modern times.

  • What are Advantages and Disadvantages of GST?

    What are Advantages and Disadvantages of GST?

    Learn and Understand, What are Advantages and Disadvantages of GST?


    Implementation of Goods and Services Tax (GST) was one of the long-awaited fiscal reform and due to various reasons it was only hanging around and could not circumvent the obstacles for the substantially long period of time so much so that people started saying that the reform may not see a light of the day. At this juncture, we need to understand that GST could eventually become a reality only because of the various advantages it brought along. Of course, no reform can be full proof and so is GST and therefore the implementation of GST had its own disadvantages with few being inherent and intrinsic to the idea of GST, few due to the structure in which it is brought and a lot is due to the manner in which it is implemented which could have been largely avoided. Also learn, Benefits of GST, What are Advantages and Disadvantages of GST?

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    While we take a stock of GST as of today, we need to acknowledge the efforts taken by the government in making it much simpler from the time first model GST code was released in June 2016 to today when we are at the brisk of 200 days post its implementation. While we take a deeper dive into understanding the advantages and disadvantages of GST, we need to appreciate the fact that this being a transactional tax its advantages and disadvantages cannot be equated for all. For instance, it is possible that one sector or industry is largely benefitted due to the implementation of GST while other sector or industry has taken the exact opposite position. The point that we need to take home is that many advantages and disadvantages of GST can be closely understood only when its impact is measured industry or sector wise.

    The list of advantages and disadvantages of GST can be very long, but herein we look at some of the major ones as explained below: 

    The Advantages of GST (Goods and Services Tax):

    • Boosts Foreign Investment and improves the overall investment climate.
    • Single assessing authority.
    • Increased certainty/ Reduced litigation.
    • Erosion of parallel economy.
    • Reduced corruption.
    • Downslide of prices.
    • Common national market throughout the country, and.
    • Increase in employment opportunities.

    The Disadvantages of GST (Goods and Services Tax):

    • Not a one nation one tax in spirit.
    • Multiple Tax rates.
    • GST Portal issues.
    • Hurried implementation of the Law.
    • Working capital blockage.
    • High compliance burden.
    • Elimination of local tax incentives/ schemes, and.
    • Disconnect from Foreign Trade Policy.

    What are Advantages and Disadvantages of GST - ilearnlot


  • Do you Know Benefits of GST (Goods and Services Tax)?

    Do you Know Benefits of GST (Goods and Services Tax)?

    Learn, How, What is it, Do you Know Benefits of GST (Goods and Services Tax)?


    GST stands for Goods and Services Tax which will be levied on the supply of goods or services or both in India. GST will subsume a number of existing indirect taxes being levied by the Centre and State Governments including Central Excise duty, Service Tax, VAT, Purchase Tax, Central Sales Tax, Entry Tax, Local Body Taxes, Octroi, Luxury Tax, etc. Also learn, GST, PDF, Do you Know Benefits of GST (Goods and Services Tax)?

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    It brings benefits to all the stakeholders’ viz. industry, government and the citizens. It is expected to lower the cost of goods and services, boost the economy and make our products and services globally competitive. GST aims to make India a common national market with uniform tax rates and procedures and removes the economic barriers, thereby paving the way for an integrated economy at the national level. By subsuming most of the Central and State indirect taxes into a single tax and by allowing a set-off of prior-stage taxes for the transactions across the entire value chain, GST would mitigate the ill effects of cascading and thereby improve our competitiveness.

    GST or Goods and Service Tax is common tax system proposed by the government. As the name suggests it is a common tax for Goods and Services. In simple words today we are paying multiple taxes such as excise duty, customs duty, value added tax, octroi, service tax etc.

    The Benefits of Goods and Services Tax (GST):

    Elimination of Multiple Taxes:

    The biggest benefit of GST is an elimination of multiple indirect taxes. All taxes that currently exist will not be in the picture. This means current taxes like excise, octroi, sales tax, CENVAT, Service tax, turnover tax etc will not be applicable and all that will fall under common tax called as GST.

    Saving More Money:

    For a common man, GST applicability means the elimination of double charging in the system. This will reduce the price of goods and services & help common man for saving more money. It is expected that price of FMCG products, small cars, cinema tickets, electrical wires etc is expected to reduce.

    Ease of business:

    GST will bring one country one tax concept. This will prevent unhealthy competition among states. It will be beneficial to do interstate business.

    Easy Tax Filing and Documentation:

    For a businessman, GST will be a boon. No multiple taxes means compliance and documentation will be easy. Return filing, tax payment, and refund process will easy and hassle-free.

    Cascading Effect reduction:

    GST will be applicable at all stages from manufacturing to consumption. GST will provide tax credit benefit at every stage in the chain. Today at every stage margin is added and tax is paid on the whole amount, in GST you will have tax credit benefit and tax will be paid on margin amount only. It will reduce cascading effect of tax thereby reducing the cost of the product.

    More Employment:

    As GST will reduce the cost of producing it is expected that demand for the product will increase and to meet the demand, supply has to go up. The requirement of more supply will be addressed by only increasing employment.

    Increase in GDP:

    As demand will grow naturally production will grow and hence it will increase gross domestic product. It is estimated that GDP will grow by 1-2% due to GST.

    Reduction in Tax Evasion:

    GST is a single tax which will include various taxes, making the system efficiency with very little chances of corruption and Tax Evasion.

    More Competitive Product:

    As GST will address cascading effect of the tax, inter-state tax, high logistics cost it will make manufacturing more competitive. This will bring advantage to businessman and consumer.

    Increase in Revenue:

    GST will replace all 17 indirect taxes with the single tax. Increase in product demand will ultimately increase tax revenue for state and central government.

    Goods and service tax is a boon for the Indian economy and the common man. It is a welcome step taken by the government.

    Do you Know Benefits of GST (Goods and Services Tax) - ilearnlot


  • What is GST (Goods and Services Tax)?

    What is GST (Goods and Services Tax)?

    Learn and Understand, What is GST (Goods and Services Tax)?


    First, take analysis GST Full Form is Goods and Services Tax. The Goods and Services Tax (GST) is a value-added tax levied on most goods and services sold for domestic consumption. The GST is paid by consumers, but it is remitted to the government by the businesses selling the goods and services. In effect, GST provides revenue for the government. Also learn, the Concept of Financial Decisions, What is GST (Goods and Services Tax)?

    What is GST? GST (Goods and Services Tax) is the biggest indirect tax reform of India. GST is a single tax on the supply of goods and services. It is a destination based tax. GST has subsumed taxes like Central Excise Law, Service Tax Law, VAT, Entry Tax, Octroi, etc. GST is expected to bring together state economies and improve overall economic growth of the nation.

    Before learning more about Goods and Sevice Tax, let’s try to understand how taxes in India work. The Government of any country needs money for its functioning and taxes are a major source of revenue for a Government. The taxes thus collected are spent by Govt. on the public.

    History of GST:

    The goods and services tax (GST) is an indirect federal sales tax that is applied to the cost of certain goods and services. The business adds the GST to the price of the product; a customer who buys the product pays the sales price plus GST, and the GST portion is collected by the business or seller and forwarded to the government.

    France was the first country to implement the GST in 1954, and since then an estimated 160 countries have adopted this tax system in some form or another. Some of the countries with GST include Canada, Vietnam, Australia, Singapore, UK, Monaco, Spain, Italy, Nigeria, Brazil, and South Korea. India is set to join the GST group on July 1, 2017.

    Most countries with a GST have a single unified GST system, which means that a single tax rate is applied throughout the country. A country with a unified GST platform merges central taxes (e.g. sales tax, excise duty tax, and service tax) with state-level taxes (e.g. entertainment tax, entry tax, transfer tax, sin tax, and luxury tax) and collects them as one single tax. These countries tax virtually everything at a single rate.

    Only a handful such as Canada and Brazil have a dual GST structure. Compared to a unified GST economy where tax is collected by the federal or central government and then distributed to the states, in a dual system, the federal GST is applied in addition to the state sales tax. In Canada for example, the federal government levies a 5% tax and some provinces/states also levy a provincial state tax (PST) which varies from 7 to 10%. In this case, a consumer’s receipt will clearly have the GST and PST rate that was applied to his or purchase value.

    India is proposed to have a dual GST set up in 2017, which will be the biggest reform in the country’s tax structure in decades. The main objective of incorporating the GST is to eliminate the tax on tax i.e. double taxation which cascades from the manufacturing level to the consumption level.

    Brief History of GST in India:

    Introduction of GST is considered to be a significant step in the reform of indirect taxation in India. Amalgamating of various Central and State taxes into a single tax would help mitigate the double taxation, cascading, a multiplicity of taxes, classification issues, taxable event, etc., and leading to a common national market.

    VAT rates and regulations differ from state to state. On the other hand, GST brings in uniform tax system across all the states. Here, the taxes would be divided between the Central and State government.

    The current system with no GST implies that tax is paid on the value of goods and margin at every stage of the production process. This would translate to a higher amount of total taxes paid, which is carried down to the end consumer in the form of higher costs for goods and services. Implementing the GST system in India is, therefore, a measure that will be used to reduce inflation in the long run, as prices for goods will be lower.

    These taxes are broadly classified into two types: Direct Tax and Indirect Tax

    Direct Tax – Direct Tax is imposed on the Income of an individual. The amount of Tax payable varies on the income earned by the individual from various sources such as salary, house rent income etc. So, the more you earn, the more tax you pay to the Government which essentially means the rich pay more tax in comparison to the poor.

    Indirect Tax – Indirect tax is not imposed directly on the income of individuals. Instead, it is imposed on goods and services which in turn increase the cost MRP) of Goods and Services. Unlike the direct tax, an indirect tax should be borne by the end customer, rich and poor alike., There are many indirect taxes. Some of these are levied by the Central Government whereas some are levied by the State Government making the indirect tax system an extremely complicated system.

    GST has been introduced to replace multiple indirect taxes levied by State and Central Governments in order to simplify the indirect tax system. GST has replaced almost 17 of the existing state and central indirect taxes (more to come in the future) such as central excise duty, additional customs duty, VAT, entertainment tax, service tax etc.

    It is called as Goods and Services Tax because it is applicable to the supply of both Goods and Services. Click for understanding GST with a simple example.

    What is GST (Goods and Services Tax) - ilearnlot


  • 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.