Creditors
Creditors are usually the companies from which you buy your goods and
equipment. If they are so kind to give you credit you are a creditor to these
companies.
The Balance Statement only tells how the company stands on the particular day
you have chosen to do the accounts. The amount stated may be different tomorrow.
To day it says 10.000. Tomorrow maybe only 9.000 because you have paid a
creditor 1.000 in cash. (the Cash Account will then go down to 4.000)
To be a trustworthy business man you should go through the Creditors file at
least each month. Then you can make sure that you pay your bills on time.
Loan from Bank
Nearly every business owner must use a financial institution to administer
the flow of money in the company.
Banks can lend your business money to large investments like buying a business
premises or a car.
It can also allow you overdraft facilities in case of a temporary shortage of
money.
You can split the different loan facilities on different accounts. It will help
you get an overview of your loans.
Tax and other public obligations
Nearly all countries make companies collect different taxes. Taxes that are
used to make the country run.
These taxes could be sales tax, tax deducted from staff salaries, health
insurance tax, environmental and clean water duty.
These taxes have to be paid at regular intervals so on the Tax Account you
accumulate all these taxes.
Owners Equity
This account shows how much "The Company" owes to the "Owner
of The Company"
Imagine that you on the 1st January start your business. This is also the day
your Balance Statement starts.
- On the 1st January you use 10.000 of your own personal money to put into
your new company. On the balance sheet it looks like this:
|
Assets |
Liability |
|
Cash |
10.000 |
Owners Equity |
10.000 |
|
Total |
10.000 |
Total |
10.000 |
Hopefully this investment of 10.000 will give you the possibility to gain
profit from your business. If the profit from the company the first year is
5.000 and you "leave the money" in the company the "Owners
Equity" will have risen to 15.000 (10.000 + 5.000).
On the other hand if you lose money from running your business the loss will
be deducted from the "Owners Equity".
- Go to next
business issue: The Art of Consultancy
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Copyright © 2009 Dynamic Business Plan 07-02-2012
