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Business Finance

Proper management of business finances is essential to the long term livelihood of the business. It usually requires an in depth understanding of financial management and is carried out by having a suitable business plan, creating realistic projections, and using professional accountants or bookkeepers to properly account for all transactions.  Accurate bookkeeping for a business can provide valuable information which will help with routine tasks such as preparing Financial Statements but it will also allow the decision makers to gain a clear picture of the financial position of the business. Overall, it will help to improve business operations and maximize profits.  Understanding business finance basics will help you run your business properly, whether you are looking to start up a business or have an existing business. Financial statements provide information on how the business is operating and when produced monthly, they provide financial information for the improvement of business operations. Financial ratios are used to analyze the financial health of a business. A budget is the future financial plan of the business and allows operating plans to be converted into financial numbers in order to ensure that these plans are possible.

Need help with finance issues for your business? Contact a qualified local business finance professional today.

According to the IRS, the form of business you operate determines what taxes you must pay and how you pay them. The four general types of business taxes are Income Tax, Self-Employment Tax, Employment Taxes, and Excise Tax.  All businesses must file an annual income tax return and the returns you must file depend on how the business is organized, meaning the business structure or the business entity established. The federal income tax must be paid as the business earns income throughout the year.  If the business is not required to make estimated tax payments, the tax due may be paid when the tax return is filed.  Self-employment tax is a social security and Medicare tax for individuals who work for themselves and counts towards future coverage in the social security system.  When a business has employees, there are specific employment tax responsibilities that must be paid.  Employment taxes include Social security and Medicare taxes, Federal income tax withholding, and Federal unemployment (FUTA) tax. Excise tax may be applicable if a business or individual manufactures or sells certain products, operates certain kinds of businesses, uses various kinds of equipment, facilities, or products, or receive payment for certain services.  

The following are topics associated with business finance that a local financial planner can assist with:

  • Loans and Financing
  • Accounting/Auditing
  • Business Taxes
  • Cash Management
  • Asset Management
  • Consulting
Maintaining sufficient cash flow is crucial since inadequate cash management is one of the most common reasons why small businesses fail in the long run. The managers and financial decision makers must understand the basic concepts of cash flow in order to have effective cash management in a business.

Asset management is a method where items that have monetary value to a business or individual are monitored and maintained. It is a systematic process of operating, maintaining, and upgrading assets cost-effectively and may apply to both tangible assets and intangible assets such as intellectual property and goodwill.  It includes managing assets so that the greatest return is achieved.  Asset Management Ratios such as ROA, Return on Assets are well known business tools used to measure how efficient a company’s assets are. Investments are measured for profitability through a calculation called ROI, Return on Investments. The inventory turnover ratio is one of the most important asset management or asset turnover ratios. Inventory is a crucial asset for a company to manage since it is imperative for companies to have the product they sell however maintaining excess inventory usually has a high carrying cost.  

Think about the benefits that will be realized for your business when you work with finance professionals. Find a local business finance professional in your area.