Most small businesses don’t necessarily require a software package to do payroll. Unless you actually enjoy spending hours doing calculations that seem to go on forever. In addition, these calculations might not end up being accurate, which could get you in trouble with your employees, and the government as well.
A business balance sheet tells the financial story of a business at a specific date (it’s a snapshot of your financial condition). Bankers, accountants, investors and business owners use them. Some better than others.
Basically, the balance sheet of a business shows your assets (things you own), your liabilities (what you owe others) and equity (the difference of what you own, less what you owe), what’s yours.
Some say accounting / bookkeeping numbers are hard to understand or even follow, just a jumble of digits. In reality, these numbers tell the story of a business. One story is told for the tax man, another for the banker and another for the owner or manager. Each story highlights its focus based on the rules of taxes, banking, and sound management of a business. All three are important and powerful… be it good or bad.
If you live in the United States and are an employer. The IRS release preliminary withholding tables for 2018 during the second week of January. Income tax laws were changed by the Senate and House of Representatives and signed by the President in the later part of December 2017.
The new tables should be in place by February 15, 2018. It’s ok to use 2017 for federal income tax withholding on employees until that time.
The plague of small business and institutional business embezzlement has even hit our small conservative city.
About 30% of all business bankruptcies in the United States are due to embezzlement or employee theft. That’s one of every three!
While every case is different, and methods change, there is one common thread to most cases. Trust… overwhelming total trust.
I will admit, I have a weakness and fondness for breakfast sandwiches. From time to time (most workday mornings) I have been known to frequent national food chains and local hangouts to get a fix for the day.
My favorite sandwich is a ham, egg and cheese croissant… in a variety of variations, like extra meat. On occasion I make a dramatic switch and get a sausage one…. but always to go.
Perhaps it’s my need for comfort food, conquering the hunger pangs or maybe even habit.
Many small to mid-sized business owners (This goes for individuals as well) suffer from “hand to mouth syndrome.” In more severe cases it’s called robbing Peter to pay Paul.
You may know it well, or see it coming or worked thru in the past…you know it in many different lights. It’s checking the mail box or paypal account, to see if clients have paid so you can hurry and turn around and pay pressing or past due vendors or meet payroll in a day or two.
So, there was this business owner sitting at my desk at the edge of desperation seeking another loan. No working capital, little equity and lots of debt. It was a nightmare. The person left with little hope as I pledged to re-crunch the numbers. Unfortunately, the numbers never came together.
That same day, another business owner came to my desk and we spoke for a few minutes. After a short call to credit administration, the customer left with a commitment for a $1 million signature (unsecured) loan at a rock-bottom interest rate.
There is a reason our economic system is called Capitalism – capital is one of the pre-requisites for surviving in the system. There are two forms of capital that, while related, are different things.
The first form is “outside capital” such as borrowed money or money put into the company by investors. The second form is “capital as business equity” or net worth. Whether you are a commercial business, non-profit or social enterprise, getting a handle of both forms of capital is vital.
