There are several more taxes that small businesses must adhere to each year. This lesson explains these other taxes including: Real Estate Taxes, Business Property Tax, State Franchise Tax, State Licenses or Fees, Unique Production or Consumption Taxes, and Assessments.
Cash disbursements is the process of paying the bills for the small business. The most common format is to issue checks, but other methods include paying via direct debits to other accounts, paying by cash to vendors (get a signed receipt), issuing refunds to customers and electronic transfers (taxes).
In small business, cash is almost always the number one issue. There is simply never enough. This is primarily attributable to growth. Growth requires both physical assets to produce more and expansion of accounts receivable. Technically the expansion of accounts receivable is the economic equivalent of lending cash.
When an owner of a small business operation transfers money from the business bank account to their personal bank account the transaction is commonly referred to as a ‘Draw’. There are other terms but this is the traditional word used. The technical definition is: ‘A transfer of earnings from the business on behalf of the owner is referred to as a draw’.
The bank reconciliation is a daily accounting function for every small business. In order to fully appreciate its value, the small business owner needs to understand the fundamentals of how bank reconciliations are performed. In addition, there are some higher level types of transactions that affect the cash position.