PAYSTUBMAKR.COM continue with the guide for a successful startup, a business plan. This chapter is about:
Your Financial Planning
There is no place for improvising with finances, the same as with fuel and cars on money or no gas will make you stop in the way to your target. Financial planning is as essential as maintaining oxygen for your diving plans.
A detailed plan for the finances or money needs at any stage of your project is what we are talking.
preparing the business plan
From the moment you start to think about your new business you start to spend money, your business plan has a cost that you need to cover with enough funds. Your study will need its budget for working space and staff of writers and specialized experts. A startup will have a cost too. Make sure about your sources and budgets; you do not want to run out of money or spend too much on the way to success.
You should have a detailed list of expenses and income expected to cover those expenses; it can be investors money for the startup and production money form the moment your business is already productive. Our financial plan must be accurate and transparent for yourself and especially your possible investors or lenders. The Best Small Business Loans of 2018 Loans for small businesses are needed when new equipment, real estate is purchased for a starting business or expanding an existing business. Financial Plan.
A scheme for your home office
1. profit & loss for the first year:
Profit and loss for the first year is an essential part of your business plan and its financial part. It has to show the business situation after the first year of operation. The first year may end in losing money that should be considered as an investment for gaining the penetrating to the market and other first-year goals to achieve.
2. Three-year profit and lost:
It is good to see a three-year operation profit and loss results. It will show you or your partners and lenders how successful your business is going to be after running for three years in the market.
Own employee in his office
3. Your cash flow for three years:
Number one tool for a financial planner. Cash flow will show you when you are going to need money and how much you will need to look for sources as a loan or investment and when you are going to be balanced or have a surplus and enough cash for growing or using as benefits.
Be careful with the projections of sales and its income, try to be as realistic as possible. You better go short on benefits and little long on expenses. Your partners will be happy to have more dividends than being asked for more cash to keep the operation alive. Make it for three years and be updating it every year.
4. The balance:
This is the main tool for analyzing the business. It takes all the values of the company and makes a balance between operational results and equity worth. How to Set Up a Balance Sheet for a Sole Proprietor
5. Know your break-even point:
Your break-even points are significant coefficient for keeping your business health. It figures as zero regarding cash when deducting the number of expenses covered by the amount of money coming from your sales. It can be calculated as the total sales made at a particular time too.
6. Capital Usage:
For the case that you are seeking some financing from the bank or other lender or investor, you will need to present your capital usage breakdown on a detailed table.
7. Making Your Business Legal
Business needs a legal persona, and shareholders are a partner in a company which is a legal entity. There are some structures for companies, and the law for the constitution of a corporation or partnership is unique for every country or state. To register with the corresponding government the corporation you need aboard of detectors, and a name, then get a tax code and licenses and permits according to your type of production. Business Structures by IRS
You will need to check with Federal, state and local authorities about any regulations that may be in effect for your kind of business. You may use professional help for the legal part of creating your company. Take a not to accomplish the following. (At the USA)
Your team working on your business plan
8. What legal structure you can use.
Four most used business structures
1. A sole proprietorship can be a freelancer’s gig jobs or any professional service. Those are one owner businesses; one person is in charge and disposable for taxation and debts. The name can be your name or a name you registered as Doing Business Name (DBA).
The benefits are that it is inexpensive to create and you have complete control over the business decisions. Tax is easy to manage as your personal and business tax return are made as only one file.
The cons are the difficulties in financing or get investors on board. A sole owner is personally responsible and liable for all the adepts and obligations. In simple words you do not lose the business and save your home, you lose it all in the case of failing to make money and pay the obligations.
How tax works:
Gain and loss are taxed as an individual personal income tax return with ordinary rates. You must pay the payroll taxes on your income as a self-employed. Find tax forms here. You can read more information about tax and a Sole owner proprietorship here IRS information