OBJECTIVES

In this class you will learn:

• The difference between cash and profits
• The difference between cash flow and cash balance
• How your business legal structure can affect your taxes
• Tax implications based on a calendar year or fiscal year setup
• Types of tax-deductible business expenses
• Online resources for tax questions

OVERVIEW

Cash is critical. Cash means money in the checking and savings, not just coins and bills.  Critical content is the cash flow, and understanding the difference between cash and profits. This is vital. We’ve left it for the end so the related financials are clear. We’ll also work again on presentation skills, working with Powerpoint, preparing the document to back-up your feasibility plan.

DEFINITIONS

Cash: Normally means banknotes and coins, as in paying in cash. The term is used in a business plan to represent the bank balance, or current account balance.

Cash Flow: An assessment and understanding of cash coming into and flowing out of a business in specific periods of time.

Profit: An accounting concept, normally the bottom line of the Income Statement (also called Profit or Loss statement). Start with sales, subtract all costs of sales and all expenses, and that produces profit before tax. Subtract tax to get net profit.

REQUIRED READING

• 3 weeks to Startup, Chapter 15, Keeping Track
• 3 weeks to Startup, Chapter 17, Paying Taxes
• The Plan-As-You-Go Business Plan,  Chapter 5, pages 194-210

Internal Revenue Service (IRS)

The IRS offers free publications to help you wade through all the tax laws and regulations for your business. Click on each link to view the document online or choose the option to download the document in a portable document format. These and other online resources are available at irs.gov

• Tax Guide for Small Business (Publication 334)
• Business Expenses (Publication 535)
• Travel, Entertainment, Gift and Car Expenses (Publication 463)
• Circular E, Employer’s Tax Guide (Publication 15)
• Employer’s Supplemental Tax Guide (Publication 15-A)

Locate an Accountant

• GoodAccountants.com = registry and referral service of certified public accountants, public accountants and bookkeepers
• AccountantWorld.com = free resources, web-based softare solutions, tools and services for accountants; includes a directory of accounting professionals
• 1800accountant.com = Free consultation for businesses with a local neighborhood accountant

Tax Preparation

• TurboTax =online tax preparation for individuals and businesses
• H&R Block =online tax preparation and tax guidance for individuals and businesses