Blog

19

May'18

How is the Best Way to Deal with a Trial Balance in Accounting?

I love this question! Lots of great stuff, if you look at it carefully…. “to deal with” meaning, “how do I handle it!” You want to handle it with care. It’s the summary balances of all the accounts and it can tell you a lot. You are probably going to have to make some adjusting entries, and the trial balance will lead you to many of them. “best way” meaning, “what should I do?” Here we want to be methodical. First off, check to see if the thing balances, i.e. debits equal credits. Don’t be fooled by programs like QuickBooks, which force the difference into an imaginary account like “opening balance equity.” (BTW, that should always be zero). Even the best accounting programs can fall out of balance. Got to check that first. If it is out of balance, wow, there is so much potential work to do… can’t live with an out of balance trial balance! Second, methodically go down the balance sheet. Start with cash. The amount in the trial balance is probably wrong. Did you do a bank reconciliation? Do you have the adjustments for things like outstanding checks, bank fees, interest, etc? If all you did …

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18

Mar'18

What influences business cycles? Where are we on the Cycle?

Where are we on the business cycle? It depends upon a lot of factors, because there isn’t just one “business cycle.” There are many: 1. The economic cycle of the world 2. The economic cycle of the country 3. The economic cycle of the region 4. The economic cycle of any particular industry 5. The economic cycle of a particular firm. All of these cycles interact. Sometimes they are in synch, at other times each are at a different phase, and we experience a blended effect. It’s sometimes difficult to distinguish which is what and how they are affecting any one person’s investments or business. The factors which affect a business cycle include these factors: a. Capital availability and cost b. Markets – demand for products c. Innovation and competition – and the value propositions d. Psychographics of the population or target market e. Social narrative and outlook ( such as optimistic or pessimistic, anticipatory of some event, or even what appears to sometimes be a bi-polar attitude expressed by group think) f. Regulation, political and legal structures. Is this all complex? A lot more complex than your college economics class would lead you to believe. The assessment of where …

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10

Mar'17

What does Financial Freedom mean?

Financial freedom means being able to do what you want, when you want without the fear of adverse financial consequences. It’s different for each one of us. It means not having to worry about whether you can meet your cash flow needs, not having to worry about whether you will run out of money in retirement, not having to worry about bills and credit cards and financial emergencies. Reaching financial freedom is a wonderful milestone. As one who has been there, done that, I can tell you that it is a feeling like no other. A great weight removed from you. You get to financial freedom by saving and by adjusting your lifestyle. I firmly believe that by living about two levels below your income, avoiding all types of debt, making saving your passion, and adopting frugal as a hobby, you can reach financial freedom. Along the way to financial freedom, you will discover what’s important in the world: friends, family, community, and your spiritual wellbeing. You will find what true wealth is and how it’s not measured by money. You will learn to avoid consumerism, and learn to live authentically. Along the way, don’t forget to be charitable. Charity …

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10

Mar'17

How do I fund my startup idea?

Assuming that you don’t know anything about funding, or how deals work, you should consider yourself a lamb wandering in the forest full of wolves. Really. First thing you need to do is get an advisor, either an CPA or an attorney who understands how start-ups work. This is the tricky part. There are a lot of people who think they know how this stuff works, but have never actually done a deal. You know what I’m talking about, right? So, find some attorney and accountant who has actually been through the process, multiple times. You will have to ask around, and interview people. (That’s a post in and of itself: see https://CEAnow.org where we actually have a course on finding the right advisors) Next, you have to work up a very preliminary business plan. Ok, so you have the hottest thing since the hula hoop. So show me the numbers. Show me the research. Prove to me that you have a USP. ( oh, don’t know what that is? Yikes!) The business plan is the center to your funding request. You can’t do anything without it. Get it done right. ( Not to sound like a broken record, but …

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05

Dec'16

Calculating Cash Flow for a Start-Up

How do you calculate the cash flow for a start up company? It’s a guess. What you hope is that you can make an educated and reasonable guess. The best you can hope to do is figure out a reasonable model for what the cash flow should be.This involves understanding your market, how suspects are transformed to prospects and then into customers, and finally how the business converts sales into cash flow. You’ll need to come up with a detailed model which describes how you will identify suspects. Where are they, how many of them are there, and how will you communicate to them? How many of them are likely prospects? How will they be sold? How will you approach and sell them? What percentage of those you originally contact will end up being customers? What is the cost of customer acquisition? You’ll have to use comparable existing businesses to validate your numbers. You’ll have to do extensive research into the industry to understand this process. Just choosing some percentage off the wall won’t hack it. You must have a reasonable, logical progression from ground zero to warm bodies handing over cash. ( I had a client once who wanted …

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22

Sep'16

Keeping Records for a Micro Business

Question: I freelance and make a lot of money, all in cash. I want to be legitimate. What should I do? Do I need to start a business? Incorporate? Answer: Many people make money “all cash” — it’s not that unusual. To make it legitimate, well, it is legitimate, since you are earning it lawfully. You don’t need to “start” a business… you already have one! So the issue is not one of having to come out from the shadows or somehow make what you are doing legal… it’s already OK. What you do have to do is do the things that a good business owner should always do. That includes these things: Keep a record of who pays you and for what. A simple log book or even a calendar would do. You should open an account which is only used for the business. It does not have to be a business account per se. Just a separate account. Banks will try to sell you some expensive business account. No thank you. A free personal checking account will do just fine. Deposit all the cash you receive, intact, on a daily basis. Don’t take some of it for personal …

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16

Jul'16

Finding Good Advisors

Question:  I just purchased a business in another state. How do I find good advisors like an attorney and accountant?

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16

Jul'16

Is Federal Tax Law the Same in Every State?

The answer is nominally, yes. The same laws apply all over the US. But that is a huge over generalization. On a granular level, THEY ARE NOT EXACTLY the same. The reason is that tax law is interpreted by the Federal courts, and there are 10 Federal court districts:

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09

Jul'16

The Best Small Business

Question:  What is the best small business to start in the United States?

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06

Jul'16

What’s the Best Small Business?

Question:  What is the best small business to start in the United States?

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