Category: Business Principles
-
Mission Statement
A mission statement is a written document identifying the businesses’ primary reason for existence. It should convey the core values and the principles of the company. It should be reviewed with staff frequently to remind everyone of the chief goals of the company.
-
Negative Basis in Business – Tax Shelters
Negative basis in business refers to the value of the equity investment in the company. It literally means you have no actual equity investment and worse you owe somebody money because other parties have fronted the necessary capital to make the business viable.
-
Shareholder Dynamics in Small Business
The majority of small businesses are owned by a single individual. An additional pool is family owned or controlled. The balance usually involves friends or relatives that are passive in ownership. These forms of ownership create some interesting shareholder dynamics and if not thought out, can create some legal and financial issues in small business when a…
-
Capital Gains – Introduction to Fundamentals
When an individual or business sells an asset, the gain or loss is classified into one of two distinct tax groups – ordinary or capital. The tax classification is strictly tied to the nature of the asset sold. For most businesses, the assets sold are inventory.
-
QuickBooks – Best Accounting Software for Small Business
For small business, there is no software to match the value QuickBooks brings to the business operation. I used Sage software and its predecessor Quantum (Peachtree) for 20 years and still do to this day. But QuickBooks is by far superior in all regards in comparison to Sage products.
-
Retained Earnings – How it Works
In the equity section of the balance sheet there is an account that tallies the lifetime earnings net of dividends for the company. This account is referred to as the Retained Earnings of the business.
-
Convertible Debt
In poker, deuces are often called the wild card. You can use the card as a ‘Two’ or as any other card in the deck. In effect, you can convert the card to something else. Well, convertible debt uses the same principle in business.
-
Types of Business Models
In business there are four distinct business models. Just about any business can be identified with one of the four. The following are the four types of business models: 1) Low-Volume, Hi-Margin, 2) Hi-Volume, Hi-Margin, 3) Low-Volume, Low-Margin and 4) Hi-Volume, Low-Margin.
-
Skimming in Business
Skimming is a generic term referring to taking a little bit off the top. In dairy, it refers to the cream at the top of the milk pail. With painting, it refers to a very thin coat of paint to identify imperfections with the wallboard. In business, it means taking a little bit of the revenue without…
-
Direct Form of Compensation – Four Different Types
There are four different types of direct compensation for employees. These include: 1) Hourly Compensation, 2) Salaries, 3) Commissions and 4) Bonuses. There is some misinformation related to direct compensation as this subject relates to owners of a small business.