Understanding basic terms help you understand what people are saying about business when they talk about any of their Finance Sheets. You will need a lot more than this, but this will get you started talking about money.

Expense, basically, it is how much your business pays out, like bills. If I have lawn mowing business my simple expenses would be gas for the mower, transportation and parts, not to mention actually paying for a mower.

Income is basically how much you make before expenses. If I mow 15 yards for $20 each, my income would be $300.

Profit is how much you make after taking expenses from your income. If I made $300, and my gas cost me $100, my profit would be $200.

“Being in the black” means making more money than you are spending.

“Being in the Red” means your expenses are larger than your profits. You will sometimes see it listed in red on a finance sheet, that is why they call it being in the red.

Credit means coming into an account. It means a positive increase. You have to be careful, because you have to know what kind of account or column it is. If it is an Income account, then it increases that column with a credit. If it is an Expense account, it decreases the value of that column with a credit.

Debit means going out of an account. It is the opposite of credit. If you debit (take from) an Income account, you decrease that columns value. If you debit (subtract) from and Expense column you increase its value since it is a negative based column.

I hope these help a little. I am sure I need to write a whole bunch more about reading financial sheets, but this will be a good start.

some pros of having a business are

 Your income might increase
 you can’t be fired
 you may choose your work hours (but the more the hours you work the more you get paid)
 It would look good on a résumé to college or another job
 hopefully you would be doing something that you love
 you would also learn things that could benefit you on daily basis depending on you line of work
 the pride and self respect of knowing that you (and your partner if you have one) could run a business

But with all great things there are cons for example some cons of having a business are
 your taking a financial risk because your investing your money in a business that unfortunately can go into debt
 unless you have something that is totally original that people want or need or your business does something that has a great competitive advantage, it is going to be hard to get your name out there remember if you can buy it in a kit at Wall-Mart then there is probably going to be Market saturation  your investing time so if you don’t have that much then you reconsider

Multiple streams of income are different ways to make money. Some examples would be

• time =money
• leveraged income
• residual income
• time value of a dollar

The first is time=money this is simple your trading your time or services for money. You may know it as a “job.” an example of this is if I mowed yards. The second one is called leveraged income this is when you hire someone to do the work for you. An example of this is let’s say that I have a catering business and instead of catering myself I hire people to do it for me for 50$ a party catered. If I charge my customers 100$ and I have three employees who each do a party my income is 300$ but the thing you have to remember is that you have to pay your employees so my profit is 150$ for scheduling and telling my employees were to go.

Residual income also called passive is money that you receive that once caused effort. Some examples are

• a house renter
• royalties
• invention

The good thing about this one is that you could break your leg, go on vacation or spend all your time another business you                                                                                 still make money.

Time value of a dollar is the belief that a dollar invested is worth more than a dollar hidden away from the world. This is very cool because by investing or just putting it in a high interest you make money make more money by not doing anything

There are many types of business. The three most basic is,

• Sole proprietor
• Partnership
• Corporation

All the others branch off of these. Every one of them has its pros and cons. So really none of them are better than one another. Each of them works better in a certain situation. For example, the sole proprietor is the cheapest to start.  But the partnership and the corporation shared blame if sued.

Sole proprietor is the cheapest and easiest business to start. You have all the power and nobody can tell you what to do. Inside the legal system of course. Another bonus is that of the all profit is given to you to either reinvest or keep.    Unfortunately a con is that if you die or can’t work for whatever reason the business dies. And you are 100% liable. Meaning if you have a restaurant and someone gets food poisoning:  If they sue you, you pay all of the money they sue you for. And you’re going to have a problem attracting qualified employees.  

Partnerships are I think are the most fun if you have a cool partner. You can have as many partners as you like and every one usually has equal rank in a partnership. You should have a plan to see how it is going to be organized. Like who is going to be in charge of what. Organization is essential in a partnership. A pro is that receiving funds is probably a lot easier with two or more. You’ll probably attract employees with the option of becoming a partner. And if you have complementary skills (Ex. author and an editor) you’ll have more than likely a better business. A bad thing is that you have someone in equal authority and you should consult at every decision. If you don’t you could have a fight. You also need to be aware that if you fight and break up your business will more than likely die. So be careful. And you are jointly and personally responsible for your partners’ actions.

Corporations are the most complicated I think. This is where stocks come in as well as corporate takeovers.  Usually you have a company that is around for a while in then you switch all of your company’s banking info and EIN. And the company is no longer yours it’s the stock holders.  Fortunately the liability is split and not all together your. Also you can get your assets protected, but this is not entirely true some companies require a personal guarantee. And whoever has the highest percent of stock owns the company. And this is a very costly operation.  And sometimes not worth it.

Hamburgers are amazing! Look at all the restaurants’ names have the word hamburgers in the title. What do you have on Fourth of July? Look at veggie burgers apparently vegetarians want them to. Look at the all stuff you can put on hamburgers.

On Friday what do you eat at lunch at school? Hamburgers. What do you see military men eating when they get home?

HAMBURGERS!!!

I’m Tyler.  I tend to be random.  Hamburgers can lead to deep thoughts.