The three most prevalent types of for-profit partnerships are: general partnerships, limited partnerships, and limited liability partnerships. 7 Corporation: The owners of a corporation have limited liability and the business has a separate legal personality from its owners. Corporations can be either government-owned or privately owned. They can organize either for profit or as nonprofit organizations. A privately owned, for-profit corporation is owned by its shareholders, who elect a board of directors to direct the corporation and hire its managerial staff. A privately owned, for-profit corporation can be either privately held by a small group of individuals, or publicly held, with publicly traded shares listed on a stock exchange. Cooperative: Often referred to as a "co-op a cooperative is a limited-liability business that can organize as for-profit or not-for-profit.
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A business structure does not allow for corporate tax rates. The proprietor is personally taxed on all income from the business. A company on the other hand, is a separate legal entity and provides for limited liability as well as corporate tax rates. A company structure is more complicated and expensive to set up, but offers more protection and benefits for the owner. 6, contents, main article: List of business entities, forms of business ownership vary by jurisdiction, but several common entities exist: Sole proprietorship: A sole auditor proprietorship, also known as a sole trader, is owned by one person and operates for their benefit. The owner operates the business alone and may hire employees. A sole proprietor has unlimited liability for all obligations incurred by the business, whether from operating costs or judgments against the business. All assets of the business belong to a sole proprietor, including, for example, computer infrastructure, any inventory, manufacturing equipment, or retail fixtures, as well as any real property owned by the sole proprietor. Partnership: A partnership is a business owned by two or more people. In most forms of partnerships, each partner has unlimited liability for the debts incurred by the business.
For other uses, see. Business is the activity of making one's living or making money by producing or buying and proposal selling products ( goods and services ). 1 2 3 4, simply put, it is "any activity or enterprise entered into for profit. It does not mean it is a company, a corporation, partnership, or have any such formal organization, but it can range from a street peddler to general Motors." 5, the term is also often used colloquially (but not by lawyers or public officials) to refer. Anyone carrying on an activity that earns them a profit is doing business or running a business, and perhaps this is why there is a misconception that business and company is the same thing. A business name structure does not separate the business entity from the owner, which means that the owner of the business is responsible and liable for all debts incurred by the business. If the business acquires debts, the creditor or creditors can go after your personal possessions.
For the purposes of your business plan, you'll be creating a pro forma balance Sheet intended to summarize the information in the Income Statement and Cash Flow Projections. Normally a business prepares a balance Sheet once a year. Here is a template for a balance Sheet that you can use for your business plan (or later on when your business is up and running your company name balance sheet as At _ (Date) assets liabilities current Assets Current liabilities Cash in Bank Accounts. The balance Sheet will reproduce the accounts you have set up in your General Ledger. You may need to modify the categories in the balance Sheet template above to suit your own business. Once you have your Balance Sheet completed, you're ready to write a brief analysis of each of the three financial statements. When you're writing these analysis paragraphs, you want to keep them short and cover the highlights, rather than writing an in-depth analysis. The financial statements themselves (the Income Statement, cash Flow Projections, and Balance Sheet) will be placed in your business plan's Appendices. For other uses, see, business (disambiguation).
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Once you have your Cash Flow Projections completed, it's time to move on to the balance Sheet. The balance Sheet The balance Sheet is the last of the financial statements that you need to include in the financial Plan section of the business plan. The balance Sheet presents a picture of your business' net worth at a particular point in time. It summarizes all the financial data about your business, breaking that data into 3 categories; assets, liabilities, and equity. Some definitions first: Assets are tangible objects of financial value that are owned by the company. A liability paper is a debt owed to a creditor of the company.
Equity is the net difference when the total liabilities essay are subtracted from the total assets. Retained earnings are earnings kept by the company for expansion,. Not paid out as dividends. Current earnings are earnings for the fiscal year up to the balance sheet date (income - cost of sales and expenses). All accounts in your General Ledger are categorized as an asset, a liability or equity. The relationship between them is expressed in this equation: Assets liabilities Equity.
The cash Flow Projection shows the cash that is anticipated to be generated or expended over a chosen period of time in the future. While both types of Cash Flow reports are important business decision-making tools for businesses, we're only concerned with the cash Flow Projection in the business plan. You will want to show Cash Flow Projections for each month over a one year period as part of the financial Plan portion of your business plan. There are three parts to the cash Flow Projection. The first part details your Cash revenues. Enter your estimated sales figures for each month.
Remember that these are cash revenues; you will only enter the sales that are collectible in cash during the specific month you are dealing with. The second part is your Cash Disbursements. Take the various expense categories from your ledger and list the cash expenditures you actually expect to pay that month for each month. The third part of the cash Flow Projection is the reconciliation of Cash revenues to cash Disbursements. As the word "reconciliation" suggests, this section starts with an opening balance which is the carryover from the previous month's operations. The current month's revenues are added to this balance; the current month's Disbursements are subtracted, and the adjusted cash flow balance is carried over to the next month. Here is a template for a cash Flow Projection that you can use for your business plan (or later on when your business is up and running your company name cash flow projections jan Feb Mar Apr may jun cash revenue revenue from Product Sales revenue. The main danger when putting together a cash Flow Projection is being over optimistic about your projected sales. Terry Elliott's article, 3 Methods of Sales Forecasting, will help you avoid this and provides a detailed explanation of how to do accurate sales forecasting for your Cash Flow Projections.
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The cash Flow Projection The cash Flow Projection shows how cash is expected to flow in and out of your business. For you, it's an important tool for cash flow management, letting you know when your expenditures are too high or when you might want to arrange short term investments to deal with a cash flow surplus. As part of your business plan, a cash Flow Projection will give you a much better idea of how much capital investment your business idea needs. For a bank loans officer, the cash Flow Projection offers evidence that your business is a good general credit risk and that there will be enough cash on hand to make your business a good candidate for a line of credit or short term loan. Do not confuse a cash Flow Projection with a cash Flow Statement. The cash Flow Statement shows how cash has flowed in and out of your business. In other words, it describes the cash flow that has occurred in the past.
Leave out those that don't apply and add categories where necessary to adapt this template to your business. To use this template as part of the business plan, you'll need to set it up shredder as a table and fill in the appropriate figures for each month (as indicated by the line "row listing each month. If you have a product-based business, the revenue section of the Income Statement will look different. Revenue will be called Sales, and the inventory needs to be accounted for. Here is an example showing how the cost of inventory is calculated in the revenue section: Company name Income Statement for the 1st quarter of (year) Jan Feb Mar Total revenue sales 3000 4,100 4,300 11,400 Cost of goods Sold Opening Inventory purchases Freight Minus. Ready to move on to the next financial statement that you need to include in the financial Plan section of your business plan? The cash Flow Projection is next.
Now let's look at putting some financial statements for your business plan together, starting with the Income Statement. The Income Statement The Income Statement is one of the three financial statements that you need to include in the financial Plan section of the business plan. The Income Statement shows your revenues, expenses, and profit for a particular period. It's a snapshot of your business that shows whether or not your business is profitable at that point in time; revenue - expenses Profit/Loss. While established businesses normally produce an Income Statement each fiscal quarter, or even once each fiscal year, for the purposes of the business plan, an Income Statement should be generated more frequently - monthly for the first year. Here's an Income Statement template for the first quarter for a service-based business. It's followed by an explanation of how to adapt this Income Statement template to a product-based business. Your company name income Statement for the 1st quarter of (year) Jan Feb Mar Total revenue services Service 1 Service 2 Service 3 Service 4 Total Services Miscellaneous Bank Interest Total Miscellaneous total revenue expenses direct Costs Materials Equipment Rentals Salary (Owner) Wages Pension Expense.
These expenses may include: Business registration fees, business licensing and permits, starting inventory, rent deposits. Down payments on property, down payments on equipment, utility set up fees. This is shredder just a sampling of start up expenses; your own list will probably expand as soon as you start writing them down. Operating expenses are the costs of keeping your business running. Think of these as the things you're going to have to pay each month. Your list of operating expenses may include: Salaries (yours and staff salaries rent or mortgage payments, telecommunications. Utilities, raw materials, storage, distribution, promotion, loan payments. Office supplies, maintenance, once again, this is just a partial list to get you going. Once you have your operating expenses list complete, the total will show you what it will cost you to keep your business running each month.
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Small Business, business Plans, financial plan section of the business plan. By, susan Ward, updated February 01, 2018. It's at the end of your business plan, but the financial plan section is the section that determines whether or not your business idea is viable, and is a key component in determining whether or not your plan is going to be able to attract. Basically, the financial plan section consists of three financial statements, the income statement, the cash flow projection and the balance sheet and a brief explanation/analysis of these three statements. This article will lead you through the preparation of each of these three financial statements. First, however, you need to gather together some shredder of the financial data you'll need by examining your expenses. Think of your business expenses as broken into two categories; your start-up expenses and your operating expenses. All the costs of getting your business up and running go into the start-up expenses category.