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Friday, November 20, 2009
Q: How can I select investments that are best for me and my micro-business?
A: Before you select investments, you must identify your short-term and long-term needs, your appetite for financial risk, and your personal circumstances (age, children, financial state of your business, etc.). These factors are crucial to making smart investment decisions.
For instance, if you are risk averse, you might choose to invest in certificates of deposit that guarantee a return and are insured by the Federal Deposit Insurance Corporation (FDIC). If you want a long-term investment and are willing to take moderate financial risk, you could invest ...
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Thursday, November 12, 2009
Q: Are there loans available specifically for woman- or minority-owned businesses or for low-income entrepreneurs?
A: Yes, there are numerous organizations that serve those types of micro-business owners. Here are two worth checking out.
Count Me In offers micro-loans to women business owners nationwide. The organization takes into consideration your type of business, prior experience, credit history and how you intend to use the money. The loans range from $500 up to $10,000 and are available for startups or existing businesses. You can learn more at the Web site, www.countmein.org.
The Association for Enterprise Opportunity (AEO) is a funding ...
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Thursday, November 05, 2009
Q: Can you recommend an accounting software package for my micro-business?
Do these packages contain spreadsheets that I might need to calculate
some of my information?
A: You can choose from a number of accounting software packages that are useful for micro-businesses.
QuickBooks from Intuit is used by many small-business owners. It provides all of the financial and tax essentials, but doesn't offer much flexibility.
For more flexibility, Peachtree from Sage Software might be a better choice. It's also simple to learn.
A-Systems Accounting Software from A-Systems Corporation is work a look, too. It includes free multi-media training.
All of these products ...
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Wednesday, October 28, 2009
Financial ratios are used to evaluate the financial fitness of your business. If you familiarize yourself with these ratios and monitor them regularly, you can better determine if your financial condition is improving or deteriorating.
Here are some of the more commonly used ratios and an explanation of the information they provide. Profitability measures the returns on assets and equity. It tells you how efficiently your investment is earning income. Gross profit margin = gross profit ÷ sales Net profit margin = net income ÷ sales Return on Equity (ROE) = net income ÷ equity
Liquidity measures your ability to ...
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Wednesday, October 21, 2009
DBA stands for “doing business as.” It’s known in some states as an “assumed name certificate.” Your DBA is an assumed or fictitious name under which you conduct business.
In many instances, a DBA is required before you can obtain a state or local business license. With a DBA, you can use your assumed business name when opening a business bank account, making payments to suppliers, receiving payments from customers, and entering legal contracts.
In some states, DBA registration is conducted with a state agency, such as the secretary of state. In other states, you register your assumed name at ...
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Wednesday, October 14, 2009
Preparing a budget, particularly when starting a new business, isn't just a good idea; it is vital to your success.
Start by purchasing a small-business accounting software package. Use the chart of accounts provided by the software to see the types of expenses you can expect your business to incur. You'll see expenses such as rent, utilities, insurance, taxes, and dozens of other items. Based on your anticipated expenses, plug in dollar amounts for the fixed costs you expect during the next 12 months.
Next, identify customers and related sales volumes. Try to project your revenues for the next 12 ...
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Wednesday, April 08, 2009
The accounts in a chart of accounts are organized
in a particular way so that financial statements can be prepared efficiently.
The five major types of accounts are as follows:
Assets Liabilities Equity and Retained Earnings Income Expense The assets, liabilities and equity accounts are
included in the balance sheet of the financial statements. The income and
expense are included on the income statement. At the end of the reporting
period, the net income or loss at the bottom of the income statement is added to
(net income) or subtracted from (net loss) the retained earnings on the balance
sheet. After this amount is added to the ...
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Sunday, April 05, 2009
Accrual and cash are the two most common methods of maintaining the books and
records of your business. If your business is a sizeable company, your lenders
or investors may require you to use the accrual method.
The accrual
method requires that you record business activity when it occurs not necessarily
when money changes hands as in the cash basis. For example, if your business
provides entertainers for children’s birthday parties, under the cash method you
would record income only when you receive the cash. Under the accrual method,
you would record income when the work that you were contracted to provide is
completed and the obligation exists ...
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Wednesday, April 01, 2009
If your business has inventory, it will be required to keep its accounting
records on the accrual method. You can select
from several ways to compute your inventory, but once you make a selection, you
cannot change the method without a good reason. Periodic vs Perpetual
Inventory Method There are two different choices to make in deciding how
to account for your inventory. The first is to decide if you will use the
periodic inventory method or the perpetual inventory method.
Under the periodic inventory method the units of inventory sold
are not subtracted from the inventory list of units available until the end of
the fiscal ...
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Saturday, March 28, 2009
If you need funds to purchase or expand a business and have not had any luck
getting a loan approved by your local bank, applying for a Small Business
Administration (SBA) loan guarantee may help.
The SBA helps small
businesses grow by providing a guaranty for a portion of the loan that a lender
makes to your small business. This means that if you default on repaying the
loan, the lender does not absorb the entire loss.
There is a lot of
paperwork involved in applying for any loan. This is true with SBA/bank
financing. The SBA has a list of required documents that is summarized
below. Application ...