Reading: How to Manage part 2 - Finance

How to manage a business     Part Two

Finance

Luke 14:28 "Suppose one of you wants to build a tower. Won't you first sit down and estimate the cost to see if you have enough money to complete it?”

Expenses

Product

Interest lost on product

Tax

Marketing

Transportation

Communication

Expenses

Web presents

Liability

Employees or Contracted

Office, warehouse, 

Shipping

Income

The sale of product or a service

How to collect – credit card, cash, check

When does customer pay and how much?

Profit

Income minus expenses

Accounting

Cash basis accounting …

recognizes revenues and expenses at the time physical cash is actually received or paid out.

Accrual method of accounting …

recognizes income in a company's books at the time the revenue is earned, but not necessarily received, and records expenses when liabilities are incurred, but not necessarily paid.

Governance and legal status

Sole propriety

A sole proprietorship is a type of business entity that is owned and run by a person in which there is no legal distinction between the owner and the business. The owner is in direct control of all elements and is legally accountable for the finances of such business and this may include debts, loans, loss, etc.

Partnerships

A partnership is a single business where two or more people share ownership. Each partner contributes to all aspects of the business, including money, property, labor or skill. In return, each partner shares in the profits and losses of the business. Because partnerships entail more than one person in the decision-making process, it’s important to discuss a wide variety of issues up front and develop a legal partnership agreement. 

Corporations

A corporation is a type of business which is formally registered as a public owned company it is recognized as a separate entity from its owners.

For-profit vs. non-profit

Tools for managing finances

Excel Spreadsheet or the generic equivalent

Programs like Quick books                           End