Before we start talking about the Financial Statements, I want to introduce you to our new friend Net Income. Income (Money coming IN) – Expenses (Money going OUT) = Net Income (This can be a Profit or Loss). Net Income tells you if your business has made a profit. If you did, this number will…

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Do you have a shoebox of receipts that sits in your office and gets more and more full every month until tax time comes when you deliver said shoebox to your CPA? Is your bank account linked to your Quickbooks, and the transactions just stream in, never to be categorized or reconciled? Do you only…

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Equity is the last piece of the Accounting Equation, which is Assets = Liabilities + Equity. If you’ve read my previous blog posts, you already know what Assets and Liabilities are, but what’s Equity? There are several definitions depending on what type of conversation you’re having (investing, society in general, business, etc.). For business owners,…

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Considerations for Long-Term Liabilities: 1.       Long-Term Liabilities typically have interest added by the Lender every month. This interest isn’t included when you add the loan to your books since it isn’t included in the amount you borrowed. 2.       You should receive an Amortization Schedule from the Lender. This breaks down all your future payments by…

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A business liability is something owed by the company to a person, entity, etc. These could be Current (short-term), Long-Term, or a combination of both. What’s the cutoff between Current and Long-Term? Current Liabilities are due within the next 12 months. If you’ll be making payments on the balance for more than a year, the…

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What is a Business Asset?A business asset is something valuable that’s owned by the company. There are different types of assets, but the one encountered the most is a physical asset like a piece of equipment or a building. So what’s the threshold between an expense and an asset? Some say $500, some say $1200.…

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Many business owners ask when they’re starting out, “How do I pay myself?” This depends on what type of company you chose when registering your business. If you have a Sole Prop or Single Member LLC, there is no set schedule or amount required. You pay yourself what you choose. This can be done by…

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Three benefits of keeping your books up to date: 1. Revenue Building Strategy – in order to be able to increase high profit customers and weed out low profit customers, you need to know which of your customers fall into which category. 2. Similar to #1, to be able to eliminate projects, product, or services that are not bringing…

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It’s common practice for new (and sometimes experienced) small business owners to make both personal and business purchases on the same cards. However, this can cause a lot of confusion for both you and your bookkeeper year round, and your accountant at tax time. Keeping your finances separate can not only make life simpler for…

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There is a common misconception that “accountant” and “bookkeeper” are interchangeable terms. However, most people go to their accountant only for tax filing and financial projections. If you don’t have a bookkeeper who works in your books regularly, this could mean you’re missing out on valuable day to day insights that could help your business…

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