Frequently Asked Questions
1. Why do I need an accountant?
If you are like most business owners, you have knowledge of your industry; you know your product and enjoy promoting it. But every business is in existence to make money. Keeping track of the money that you are earning, spending and saving is crucial to your success.
2. Where do I find tax forms?
You can find all of the necessary tax forms on the IRS and various states websites.
3. Do I need an Employer Identification Number?
Even if you have no employees, you will need an EIN to open a business bank account.
4. What are budgets and forecasts and should I have them?
Budgets are estimated costs over a period of time. Forecasts are what you anticipate your revenues to be over the same period of time. These are the financial quidelines for running your business. This is your report card and will help you determine your financial strengths and weaknesses.
5. Do I need a Sales Tax License?
Most likely if you are selling a tangible product or services you will need to collect Sales Tax. Check with the taxing agency in the state which you are doing business.
6. What is a Cash Flow Statement?
The Cash Flow Statement is a format that allows you to see when cash flows in and out of your business. Understanding Cash Flow will give you the ability to plan expenses instead of having to borrow to meet cash needs.
7. What is working capital?
This is the cash you will need to open and remain open on a day to day basis. This will develop into your Cash Flow Analysis.
8. What are sources of financing?
There are basically two methods of financing. They are either personal resources such as family and friends or outside resources such as banks.
9. How much money should I borrow?
Determine what your start-up costs are as well as necessary working capital to open and run your business until sufficient cash flow is generated. Then determine how much of that you want to borrow and ask for a little bit more. Don't get caught in a cash crunch at the outset.
10. How do I increase profitability?
There are only two ways to increase profits; increasing sales or decreasing expenses or both.
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