Category
Business
Don’t Let Your Personal Finances Get Tangled Up in Your Business’ Finances
As a business owner, you will spend a lot of time dealing with financial matters. The way you handle them can make a big difference in how successfully your business succeeds. The first step is to separate your personal finances from those of your business. You may be tempted to use the money for your […]
Put Together Your Net Income
Put together your net income for the year. If you had some big expenses, like a car or a home, be sure to include them.Now subtract the following things: – income tax – insurance – social security – phone That is your net pay. How much of that do you get to keep? If you […]
Liquidation of a Business Under Common Accounting Methods
Liquidation of a business under common accounting methods involves many arbitrary estimates, judgements and assumptions. If the business is being liquidated by a receiver, an auditor or an accountant, for instance, they must value the shares in the business at their estimated market value. But this value cannot be determined for certain until it has […]
Discuss Outsourcing Vs. In-House Bookkeeping.
I think it is clear that outsourcing bookkeeping is more efficient than doing it in-house. The people who would do the accounting in-house are probably better used doing other things, and even if they weren’t, you should be able to hire competent accountants for a fraction of the cost of keeping them on staff. Accounting […]
Why You Should Outsource Your Accounting and Administrative Work
A lot of small businesses hire people to handle their payroll and other administrative tasks. I don’t think it’s a good idea. Most companies that do this think of themselves as “buying time”. It’s cheaper than hiring extra employees, and the time they buy is mostly spent on things that someone with a business degree […]
Keep the Right Information Moving in the Right Direction
An implication of the flow principle is that you are always better off moving information in the direction of your net flow, even when that means reversing the direction of your flow. As an example, suppose you are a new business with no money, sitting at home making something you can sell on eBay. If […]
Pay yourself before anyone else gets the money
So here is the rule: pay yourself before anyone else gets the money. And what does that mean? Well, if you are self-employed, it means putting aside some of what you bring in for taxes and retirement savings, so that you can spend the rest on your living expenses. If you aren’t self-employed but have […]
Why use a Periodic Inventory System
The traditional way to track inventory is to count how much you have every time you make a sale (or, if you sell stuff too rarely to count all at once, estimate how much you had at the last count). The counting cost is high–in fact, since it’s done infrequently, it’s an opportunity cost of […]
Minimize learning curve and take time to understand the business
The businesses you work in, and the technologies you use, change so fast that it’s hard to keep up. There will always be some new thing you need to learn. You’ll be able to predict your future career more accurately if you know what kinds of problems your boss is trying to solve. Learning curve: the […]
Learn how to become a good financial decision maker
A bad financial decision can destroy your wealth. Most people do not think about that when they make one. They do not think about it because they are bad financial decision makers. But if you are not thinking about the risk of making bad financial decisions, you will never learn how to make good ones. […]
Factor in all your business’s expenses
The accountant’s advice is obvious: on your balance sheet, you need to list all your business’s assets and liabilities on the right and left sides of the page, respectively. That way, if anyone asks, you can just tally up all the assets and subtract all the liabilities on either side and come up with a […]