You are not your company – meaning?? You get sued underyour name and the company gets sued under the companyname Law Enforcement Law Your company Enforcement can get punished independently of you
Know the period for which your financial statements aremade up for!! Understand that your Balance Sheet or Profit & Loss or Income Statement is always made up for a certain period – generally 12 months. All the figures would be for this specific period. The balance sheet is a position document that shows the position of your assets and liabilities on a particular day!
For me Asset and Liabilities mean – Eh!! Asset?!? Liability!
It is good news when you have more people owing you money than theother way round Receivables Payables You will find these items in your Balance Sheet. Receivables on the Asset Side and Payables on the Liability/Equity Side
Fixed Costs – These are your costs for keeping your office open! Sountil you close down operations, they aren’t going anywhere Some staff costs All these expenses sit in your Profit & Loss Accounts. Search them out and identify what your business cannot survive without!
Check how much money you have in the bank – this is the amount youcan actually cash out in case you need to! There would be one line item in your Balance Sheet called “Cash and Cash Equivalents”. Under this head you will find all those assets which are readily convert able into cash. Money available in your bank account sits right in this account
Understanding your tax obligation – The amount that is expected to bepaid out in taxes every year sits right in your Balance Sheet. Search itout and avoid surprises! There would an item under the head - Tax Payable or Tax Liability in your Balance Sheet on the liabilities side, this is the approximate amount you should be prepared to pay as your tax!
The big question of Equity? What does Equityreally mean As the owner of the Company, all the money and the assets you bring into the company should be returned back to you one day. This “Owings” from the company to you comprise Equity. It could be the money you bought in for set up/ capital. The assets you gave the company etc.
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