A sunk cost is money that you’ve already spent that you can’t get back no matter what. Many people will continue spending money on something or moving forward with a project or idea simply because they’ve already put so much money, time, and effort into it. The reality is that the sunk cost is done, … Read more
Books The Total Money Makeover by Dave Ramsey – This is all about personal finances but it doesn’t matter how successful your business is if all the money that comes home is poorly managed. This book can be a true life changer for you, your family, and your employees. Most people who follow Dave Ramsey’s … Read more
A sinking fund is how you save up for a specific large expense that you know will come in the future. In personal finance, it can be saving up for a new car, a down payment on a house, replacing the roof or HVAC system, etc. In business finance it can be whatever your business … Read more
Most businesses take on at least some debt at some point. Most need funding just to get started, and growth later can require additional debt. However, it can also be the undoing of your business. Most businesses fail in their first year and the ones that fail later often do so for the same reason, … Read more
One thing I’ve learned over the years is that sometimes it’s important to not care about certain expenses. Yes, this contradicts all sorts of teachings, but let me explain. I’ve done the books for people bringing in over $600,000 per year. Those same people wanted me to call Verizon to question $2.51 on a $250 … Read more
This seems simple enough, but having done enough bookkeeping, it needs to be said. Have a separate checking account for your business. All money the business makes should go into the business checking account and all expenses should be paid from the business checking account. This alone keeps your bookkeeping much simpler, much easier, and … Read more
It’s very common for a business owner to have made purchases before the business was officially up and running. This isn’t a problem at all. They should definitely still be on the books and it’s a simple journal entry between the proper expense account(s) and the owner’s contributions account. As the owner, you can make … Read more
I still remember the first time I spoke with a CPA about doing my taxes and they asked if I was an S-Corp. I said I wasn’t and they said I should be. I asked why and they said it’s better. “How?” I asked. “It’s better for you” was all I could get. What good … Read more
This one can be a little tricky, so you need to double-check with your tax preparer what is best for you, but if you run your business from home or even just have a home office in addition to your business location, you probably should be deducting for it. The exact amount can be done … Read more
This is one thing that many if not most business owners forget to do or don’t even know they needed to do until it was too late. It’s also a very easy way to quickly get your business in financial trouble. If you are on payroll, you pay the government your payroll taxes out of … Read more