Month: January 2014

QuickBooks in Construction Accounting – Transfer Work in Process to Cost of Goods Sold

I want to thank two readers for asking about this issue.  While reading Using QuickBooks in Construction Accounting they noticed that I failed to explain how to transfer the costs of construction to the profit and loss statement.  In effect, how do you move these individual costs over to the costs of goods sold section...

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Alcohol Costs – Monitor Closely

Alcohol Costs

In the restaurant business, alcohol is the single best margin generator.   If you are going to have a profit, this is where the money is made.  As an owner, you need to understand the value of alcohol sales and the associated costs.  This aspect of operations not only generates high contribution margins, it covers its share of costs and ultimately adds to the bottom line. 

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Partnership Agreements – Terminology

Each of us has our own built in dictionary for terms we hear in our business lives.  I find it fascinating that the standard business term ‘Equity’ is interpreted differently within the business world.  I often interpret the term using the Internal Revenue Service definition because my background is in taxation.  Lawyers use this term...

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Common Stock – Definition

A document indicating ownership in a corporation is often referred to as common stock.   It identifies an equity position in a business.  The document or certificate is commonly referred to as a security and provides certain rights to the holder (owner).  These rights include voting and residual value upon liquidation of the company. There is …

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Capital Expenditures – IRS Definition

The Internal Revenue Service uses a complex definition to identify capital expenditures (assets).  A capital expenditure is not deductible as an expense in the tax year purchased; the taxpayer or entity must use depreciation, amortization or depletion to obtain deductible value on the entity’s return.  This article is an introduction to the Internal Revenue Service’s...

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Tip Income – Employer Responsibilities

Tip Income - Employer Responsibilities

The Internal Revenue Service is acutely aware of the volume of tip income generated in the United States.  Therefore they are shifting the compliance aspect of this income onto employers.  This is a direct result of our government’s need for more revenues including Social Security and Medicare taxes.

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Quick Ratio – Definition, Explanation and Proper Use

Quick Ratio

The quick ratio is a formula used in business to identify the ability of a business to pay its current liabilities.  It is also known as the ‘Acid Test’ formula (ratio).  In the large markets this formula is one of the financial industry ratios used to value the stock of a corporation.  In the arena of the small business, you should only use this ratio as a means to gauge ability to pay your bills right now.

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Partnership Agreements – An Introduction

There is a tremendous amount of information to convey to fully understand partnership agreements.  This is the first in a series of articles related to partnership agreements.  Throughout this series I will explain the various sections and issues a small business owner faces in creating a sound and fair agreement with a single or multiple...

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Public Charity – Getting Started with the Proper Documents

A public charity is another term for the coveted Internal Revenue Code Section 501(c)3 status.  This designation allows all donations made to the charity to be tax deductible for taxpayers.  To obtain this designation, the organization must have the proper provisions within the organizing documents.  When getting started, it is essential for the organization to...

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Mileage Deduction – Rate for 2014

Odometer

On December 6, 2013, the Internal Revenue Service announced the mileage rate deduction for 2014.  They reduced the amount allowed one-half a cent to 56 cents per mile.  So how do you calculate and use the mileage rate formula for tax purposes?  If you are a new business entrepreneur, you will want to know how...

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