MANAGING AND RUNNING A SMALL BUSINESS 1

Managing and Running a Small Business

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Fact file link is provided here

https://www.dropbox.com/s/9xrfqv1bqvn4uy5/factsheet-2-page.pdf?dl=0
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In the broadest sense, the term "financial accounting" comprises all aspects of

managing a company's finances, from keeping detailed records to making accurate

projections. It's important to keep an eye on all of this so that you can make the right

decisions for your organization. Budgeting, acquiring lines of credit, and setting up a

bank account for corporate needs like payroll are some of the first steps in effective

financial management. Financial management, in a nutshell, is critical. The Federal

Reserve System of Chicago conducted a study of successful businesses and

discovered that they had four characteristics:

 Credit experience and expertise

 Unused credit balances are at an all-time high.

 Budget control and management

 Payroll money saved aside

According to another study, the more regularly a small firm examines its budget, the

better its chances of success. According to the US Small Business Management,

those who are doing on a yearly basis have a successfulness of as low as 25%.

These rates rise to 75-85 percent and 95 percent, respectively, when done weekly or

monthly.

Cash flows

A company's cash flow is its lifeblood. In a nutshell, cash flow is the amount of

money that enters or exits your organization within a certain length of time. A positive

cash flow would be one in which funding is coming in, while a profit and loss

statement is one in which money is being spent. Any company's ultimate objective is

to have a higher positive cash flow than a negative one. Many new firms face a

period of negative cash flow as they spend in machinery, inventory, or promotion

MANAGING AND RUNNING A SMALL BUSINESS 3

while attempting to grow a client base at the same time. For young enterprises, the

biggest danger is falling into a scenario where you can have to pay rent, utility bills,

suppliers, wagers or other expenses that exceed the amount of money that you have

pouring in. This is why so many companies go bankrupt. Understanding how

corporate cash flow fluctuates throughout the year can help your company make the

most out of large and powerful seasons and better withstand the weak-sales times

for firms that suffer a lot of volatility. This is one another advantage of maintaining

accurate financial records. For a variety of reasons, keeping a tight rein on your

company's cash flow is essential if you want it to continue to succeed. To that end,

you should devise a systematic way to track cash coming in there and money flowing

out. Keeping count of delinquent payments, managing expenditures, eliminating

unnecessary spending, finding you’re most lucrative items or services, securing

investments or company loans, and several other vital duties will be made easier if

you have your organization's key figures at your disposal. Budgeting is the practice

of documenting all of your company's business activities, so you'll need to determine

either you're up to the work or if you'd benefit from expert help. Small and medium-

sized businesses may save money and time by using a cloud-based accounting

solution like QuickBooks. In addition to assisting an accounting software service, you

may wish to talk with a licensed accountant as your firm expands. Inventories, sales,

contracts, bill payments, employee paychecks, loan repayments, and many other

aspects of your company may all be tracked with QuickBooks. Because they're a

member of the Intuit family of tools, you can quickly import your data into TurboTax

when tax season rolls around.

Cash flow statement

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The cash sale activities shown in the cash flow statement provide an overview of a

company's entire liquidity. It summarizes the entire amount of money available at the

end of a given accounting period by reporting all income and expenses. A cash flow

statement consists of three parts: operating, purchasing, and financing. There is a

net gain or loss in cash for both of these three areas. Operations shows a cash flow

for that same period of time. The cash expenditures that were developed to create

the sales are also shown. Rent, salaries, and other overhead are all examples of

business expenses. Similarly, the company's financial statement's financing parts

are tied to the shareholders equity expenditure, which again is related to the debt

and equity on its financial statements. The primary emphasis of cash investment

activities is on assets, which can be seen in the purchasing of assets as well as the

profits from such investments. Debt and equity issues, as well as cash payments for

responsibilities such as dividends, are included in the operating cash activities.

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CASHFLOW STATEMENT
JUL 2022-JUNE
Fiscal year begins: (Pre) 2023 Financial
Startup ($ Per month)
Expenses EST ($) 01 statements
Cash Paid Out  
  When it
Purchases (merchandise) 400
1,244
  comes to
Purchases (specify) 97
654
  corporate
Purchases (specify) 98
775
  accounting, a
Gross wages (exact withdrawal) 55
665
  company's
Payroll expenses (taxes, etc.) 233
987
  financial
Supplies (office & operations) 44
1,099
  statements
Repairs & maintenance 255
800
  are its
Advertising 756
1,000
  cornerstone.
Car, delivery & travel 445
2,000
  Those in
Accounting & legal
700
  charge of
Rent 75
900
  evaluating the
Telephone 150 13
340 company's
 
Insurance financial
500
 
Taxes (real estate, etc.) 73 health utilize
877
 
Interest this
754
 
Other expenses (specify) information.
250
 
Other (specify) It's possible to
230
 
Other (specify) glean valuable
788
 
Miscellaneous information
600
 
Total 2,544 about a health
15,313
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insurance plan and potential issues by looking at its three main financial statements:

its balance sheet, its statement of income, and its cash position. It's important to

keep in mind that all three of the financial information are separate and connected.

They give a detailed view of how the business operates.

The balance sheet

Book value is shown on a company's balance sheet (also regarded as an income

statement status). The capital structure summarizes a company's financial gains,

commitments, and ownership' equity at a given moment in time. Numerous views

may be quickly gained by doing a detailed analysis of the balance sheet in most

circumstances. In order for your capital structure to are very much in balancing, you

must have investments that are equal to your obligations and capital. Analysts say

that the acquisition price or liquidity of the firm is proportional to the combined of its

assets less the sum of all of its obligations. An analyst's entire capitalization might

also be considered, which includes the focused on the long debts. In the asset

portion of the balance sheet, researchers pay close attention to how effectively a firm

manages its short-term obligations and its long-term commitments. Balance sheet

performance may be evaluated using a variety of metrics. Most of the most often

utilized measures include return on assets, cash flow, days to production, debt to

creditors, and total debt.

Balance Sheet
1 July 2022
Assets 2022
Current Assets  
Cash 97,554
Total current assets $ 97,554
Fixed (Long-Term) Assets  
Long-term investments 1,758
Property, plant, and equipment 340
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(Less accumulated depreciation) 200

Intangible assets
Total fixed assets $ 2,298
Other Assets  
Total Assets $ 99,852
Liabilities and Owner's Equity  
Current Liabilities  
Accounts payable 7,060
Income taxes payable 543
Total current liabilities $ 7,603
Long-Term Liabilities  
Long-term debt 9,870
Total long-term liabilities $ 9,870
Owner's Equity  
Owner's investment 657
Retained earnings 756
Total owner's equity $ 1,413

Total Liabilities and Owner's Equity $ 18,886

Income statement

You may learn about the company's revenue and costs by looking at its income

statement. A business's whole capital investment may be better understood as a

whole. The net income of the firm includes all expenses, direct and indirect, as well

as management and capital expenditures. The top line, which begins with indirect,

reveals what more money a business earned during a certain period of time. This is

followed by a breakdown of the actual expenses incurred in order to generate that

revenue. Direct commercial expenses are described by the phrases "product cost"

(COGS) and "cost of sales" (COS). The difference between revenue and sales

expenses is used to determine gross profit. Sales revenue is commonly used as a

measure of net income in business. Indirect expenses are also included in the

financial report. Overhead expenses associated with a company's operating income

activities are separated. This includes salaries, administrative spending

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expenditures, research and development, and amortization. In the end, net profit is

calculated by subtracting gross profit from operating income. Finally, on the financial

report, you'll see the part for capital expenditures. Non-recurring expenses like taxes,

mortgages, and insurance are the last ones to be considered here. A company's

bottom line attributable profit, or the total amount of earnings it has produced, is

reduced by these deductions. The income statement not only drives the firm's other

two accounting records, but it also contains a plethora of info about how corporation

is really operating.. A company's gross profit at the end of a term will be included as

net income in stockholders' equity. Net income serves as a line item in the income

report for a certain operation. A company's capacity to pay short-term liabilities

includes accounts receivable from past sales. Analysts like to look at a statement of

financial position to see how profitable it is. The operating margin, earnings per

share, and net margin, as well as the performances of the tax ratio and liquidity

ratios, are the most important ratios for analysing the financial report.