Why You Should Know ‘Owner’s Equity’ as a Business Owner
Small business owners always enter their business full of enthusiasm, thinking that they have taken all the necessary steps to succeed. However, financial management quickly becomes a “nightmare” with all its challenging terms and ambiguities. Over time, and several transactions later, you’ve undoubtedly wondered – What is owner’s equity?
You have probably researched this topic, but have you understood it clearly? If you understood what it means, great, but if you didn’t, we’ll try to explain it more thoroughly:
To begin with, when you first invest money into your business, overtime that investment will grant you returns which will be added to your original funds unless it has been withdrawn from your business intentionally.
These returns may be in the form of profits or losses. Therefore, they will increase or decrease the original investment made into the business. If you have not withdrawn profit (dividend) from the business for personal use, the amount of money earned represents the total stake you hold in your business.
The owner’s equity is defined as a residual claim, not the primary claim in your business. The primary claim would go towards settling the debt of external creditors. Whatever remains left would be used to fix the owner’s equity, thus categorized as a residual claim.
Now let’s conclude the information covered.
2021? It’s time to upgrade your accounting good habits!
No matter the size of your business, having accounting good habits will be the backbone of your success. What practices should you adopt? Where can you even start? This article has the answers to your questions.
It’s the end of the year! Are you booking your revenue correctly in compliance with IFRS?
The end of the year has its own meaning for each of us. It’s the time when we start summarizing everything we achieved, failed or succeeded. Although for some of us, especially for small business owners, the end of the year and the reduction of all accounts and financial work is a real headache. In order to make it easier for you and help you better understand the subject, we will explain the meaning and application of an unavoidable term when it comes to managing finances.
FINDING THE RIGHT ACCOUNTING PARTNER IN DUBAI
Meet SST; A Dubai-based successful international company offering globally recognized safety training programs from Ellis & Associates and consultancy for aquatic facilities.
We were wondering about how they achieved success while managing their accounting tasks since they are such a global and successful company. So, here is the answer from the Managing Director of SST – Sue Johnson: finding the right accounting partner. She mentioned that previously SST had partnered up with a few different accounting companies in Dubai before they found the right one. They even tried partnering up with larger accounting firms however they felt themselves like a ‘number’ and individuals who couldn’t get the support they needed. STT team was actually struggling to find someone who could understand their business quickly and who were responsive to their changing needs.
Why Teamwork Matters?
Your team is a reflection of you and your business.
In today’s knowledge economy, most of our jobs involve interacting with others that are the same or even different line of profession. The need for effective teamwork is critical for any business. The ability to simultaneously perform as an individual and together with your colleagues or employees in effective teamwork is key to attaining growth and success. To have a meaningful and lifelong career, you need to work well with others, which is why teamwork is so important in the professional world. Why does teamwork matter?
How to face the summer with the pandemic?
Anticipate, react, and adapt.
The shutdown of the economy due to a pandemic has never been before.
Almost all industries were affected during this period and they either had to fire their employees or continue with them with a salary cut and unpaid leaves. Therefore, laid-off employees consume fewer products or services, (because of the lack of money and also because of the non-ability to project) and this affects the overall world economy like a chain.
Since today’s world is no longer the same as it was 3 months ago, if your business model is the same as it was in early March, you are in denial.
Now, your biggest objective should be to create an action plan in a case where this scenario can happen again.
Let’s focus on your case: is your business in a 6 months problem or a one-year problem?
Your Post-Pandemic Financial Recovery Solutions
Although it is hoped that the epidemic will slow down with the arrival of summer and higher temperatures, the uncertainty continues in the world of economy. That’s why SMEs should proactively resist both operational and financial difficulties and they need to take decisive steps to avoid potential risks. It is time for businesses to implement specific strategies and to put them in a cash flow that will allow them to determine exactly how much working capital they will need.
The uncertain demand and deteriorating supply chain create cash and working capital problems in businesses.
Here are some suggestions for the SMEs struggling to manage working capital:
4 Tips Improve your Business Cashflow
Cashflow Is the total amount of money flowing in and out of your business. When more money is flowing in than out, you have positive cash flow, when more is flowing out than in, you have negative cash flow. To build reserves and protect against disruptions, businesses should monitor their cash flow.
5 Tips to Help SMEs Go Through Difficult Times
In unpredictable and difficult times, it is important that managers are able to take fast decisions and adapt quickly to the changing conditions. They have to learn to be flexible and rethink their plan to move forward. Here are 5 tips to help you go in the right direction:
5 Common Financial Mistakes Small Businesses and Start-ups Should Avoid
We have to admit that starting a business is not an easy job. Many factors need to be put in place, to plan in advance, and the hardest part is to keep things under control. Although it may be a hard fact to face, many of us are just simply not very good at managing our finances. It is an extremely difficult path full of traps, and these traps lead owners to make mistakes. Financial errors are the most common mistakes among small business owners. In this article, we will present 5 common financial mistakes that small businesses and start-ups should avoid.