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31 Simple Money Cheat Sheets For Business Owners That Don’t Understand Money

Updated on April 26th, 2023
Simple Money Cheat Sheets

Running a business is hard. Even more difficult? Running a business when you don’t understand money.  If that’s you, we’ve put together this list of 31 simple money cheat sheets to help you better understand money.

1. Opening a Bank Account

After you’ve settled on a name and registered your business, you have to open a commercial bank account with an institution that is business friendly and can help you grow, such as:

  • Silicon Valley Bank offers cash management and investment solutions, online and mobile banking, and advice and resources for startups.
  • Square Capital, which is a part of the Square payment processor, provides affordable small business loans.
  • Chase has over 5,300 branches and 15,500 ATMs nationwide, mobile banking, free business debit cards, and the ability to process payments.
  • Square 1 Bank offers customized solutions for your business, as well as collections, fraud protections, and international banking.
  • U.S. Bank has a 3 different business packages, such as the Silver Business Package. This includes 150 free transactions per statement cycle, $0.50 per transaction, a free card reader, mobile banking, $200 payroll credit, and prefered interest rates on equipment financing.

Applying for a business bank account is quick and easy, as long as we have the proper documentation; personal identification, business name registration papers, and business license.

2. Keep Business and Personal Expenses Separate

Since you have a business bank account, you should also sign-up for a business credit card, there’s no reason for you to keep blurring the lines between your business finances and personal money. In fact, it’s important for you to keep these expenses separate because:

  • It’s important to the IRS. You can’t deduct personal expenses, like that new TV, as a business expense. If so, you may face a tax audit.
  • It also makes record-keeping less complex since it prevents you from mixing-up your business and your.

3. Bookkeeping Basics For Business Owners

When it comes to bookkeeping, you can either do it yourself or outsource it to a processional. Even if you decide to do this task on your own, you still may want to hire an accountant to prepare year-end financial statements and tax forms. Also, don’t forget to purchase accounting software like Quickbooks to make this responsibility as painless as possible.

Regardless if you do your own bookkeeping or hire a pro, here are the most common bookkeeping accounts that you should at least become familiar with so that you don’t encounter any cash flow problems:

  • Cash are all of the transactions that pass through your business.
  • Accounts receivable are the payments that haven’t been collected for the products or services that you’ve sold.
  • Inventory would be the products that you have in-stock.
  • Accounts payable is the money that your business owes to creditors.
  • Loans payable is the money that you owe if borrowed money to buy equipment, vehicles, furniture or other items for your business.
  • Sales are all the incoming revenue coming into your business.
  • Purchases are the items that you bought for your business.
  • Payroll expenses are the money that your pay your employees and are most likely your largest expense. Keep these records accurate and current in order to meet tax and government requirements.
  • Owner’s equity tracks the amount of money that each owner has put into the business.
  • Retained earnings tracks the money that you’ve made, as well as any money that you’re reinvested into the business.

4. Accounting Basics For Business Owners

Like bookkeeping, you can do your own accounting or outsource it. Again, even if you do hire an accountant, knowing the basics of accounting will ensure accurate management reporting and tax filings.Your bookkeeping software, like Quickbooks, should also handle your accounting needs.

  • Cash Basis vs. Accrual Basis. These are the two accounting methods that you’ll use for your business. The cash basis means that your accounting books are based on the date when cash changes hands. For example, if you sold a product in August, but didn’t get paid until September, then this transaction would be recorded in your September books. The Accrual basis, however, is based on when the service was performed. That means that in the example above, the transaction would be recorded in the books for August.
  • Debits and credits. Every transaction is recorded in a general ledger, which is composed of debits and credits, aka the money that you owe and the money that people owe you. Because there are two entries, this is called double-entry accounting.
  • Make sure to record a transaction into your accounting software, whether if it’s accounts payable or accounts receivable, into your general ledger so that your records are organized, in order, and accurate.
  • You also have to record your salary or owner’s equity into your general ledger.

5. Financial Ratios

Financial ratios will help you understand the financial state of your business. These can get a bit confusing if you’re a new business owner or don’t understand money, but you should definitely brush up on the following financial ratios to know how healthy your business actually is:

  • Quick Ratio/Acid Test Ratio (Cash + Marketable Securities + Net Accounts Receivable) ÷ Current Liabilities = Quick Ratio. This test determines whether or not you have enough money to pay expenses like loans, accounts payable, income and payroll taxes payable, and credit card debt.
  • Cash Flow to Debt Ratio (Net Income + Depreciation) ÷ Total Debt = Cash Flow to Debt Ratio. This is used to determine if you have cash flow problems. If your cash flow to debt ratio is less than 1:0 then need to start securing more funds to cover your expenses.
  • Net Profit Margin (Total Revenue – Total Expenses) ÷ Total Revenue = Net Profit Margin. This ratio determines how successful your company is at turning a profit. A high net profit margin generally is an indication that you have found a good price point for your products.
  • Gross Profit on Net Sales (Net Sales – Cost of Goods Sold) ÷ Net Sales = Gross Profit on Net Sales. This calculates whether your average markup covers your expenses and by how much. For example, if your gross profit on net sales is consistently low, then you may be selling your products or services too low.

6. Budgeting

Budgeting may sound complicated, but it’s simply used to ensure that that you’re spending less money than coming in, as well as helping you plan for both the short- and long-term. To get you started, here are six simple budgeting tips that you should implement immediately:

  • View it as spending plan. You can be flexible and loose with your budget and still stay on track.
  • Estimate your monthly spending. As long as you don’t spend it before you earn it, there’s nothing wrong with estimating how much you’re going to earn each month.
  • Separate business and personal expenses. We discussed this above.
  • Set aside money for taxes. Paying taxes is your responsibility. Meet with your accountant or a CPA to determine your tax rate and find out how much you have to pay.
  • Make savings contributions a fixed expense. Make saving a priority so that you have an emergency fund to fall back on.
  • Create a bare bones budget as a backup. This lists only the basic expenses you need to meet to survive and can be used during slower months in order to pay your expenses.

7. Groups That Do Business With a Business

There six groups that are connected with your business. By knowing their expectations and how to interact with them you can ensure that your business is going to be successful.

  • Customers. These are the people who purchase products and services for your business.
  • Employees. These are the people that you hire to perform certain services. Besides a salary, you also have to be aware of taxes and benefits like health plans, vacation and pension pay.
  • Suppliers and vendors who provide your business with everything from office equipment, electricity, legal or accounting advice, etc.
  • Debt sources of capital loan money to a business and charge interest on the loan amount.
  • Equity sources of capital are the individuals and financial institutions that invest in your business, but expect your business to earn a profit.
  • Government agencies collect income taxes, payroll taxes, value-added tax, and excise duties. Government agencies also issue grants and set regulations.

8. Balance Sheet

A balance sheet is one of the three primary financial statements of a business. It’s essentially a summary of your financial position at the end of an accounting period based on everything that you own (=assets) and owe (=liabilities).

Assets would include:

  • Fixed assets, such as Property and Equipment.
  • VAT asset, which is the value added tax that was part of the goods and services you purchased and is owed to your by the tax authority.
  • Trade receivables, which is the money that your customers owe you.
  • Inventory
  • Cash

You liabilities would consist of:

  • Trade payables. These are what you owe to suppliers.
  • VAT liability, which is the amount associated with the sales you generated and that you owe to the tax authority.
  • Debt, which is what you owe banks.
  • Equity, such as capital stock and retained earnings.

9. Income Statement

This is another essential primary financial statement, which is also known as profit and loss statement, that is a summary of sales revenue and expenses during a specific period.

Your income would include all of your sales and tax income, while your expenses would be purchases; employees; depreciation, interests; and tax expenses.

10. Cash Flow Statement

The final primary financial statement would be the cash flow statement which summarizes how much cash has come-in and come-out during a specific period.

You cash flow statement consists of three parts:

  • Operating cash flow that displays the cash in-flow and outflow that are elated to your operative business. You use either the indirect method or direct method to calculate the operating cash flow.
  • Investing cash flow that shows what you have invested in fixed assets.
  • Financing cash flow shows how much money you received and paid to investors.

11. The Accounting Cycle

If you’re going to handle your own bookkeeping, then your work isn’t completed until you’re made your way through the accounting cycle, which consists of the following eight steps:

  • Financial transactions, such as sales, paying-off debt, and purchasing supplies, start the process.
  • Each transaction is then listed in the appropriate journal in chronological order.
  • All transactions are posted in the General Ledger.
  • Following the end of your accounting period, which could every month or quarter, you calculate your trial balance.
  • If you trial balance calculations are incorrect then you need to make the proper adjustments on a worksheet. These adjustments should account for any depreciation of assets and to adjust for one-time payments.
  • You then post any corrections to the affected accounts by adjusting your journal entries.
  • Financial statements, like your balance sheet and income statement, are then prepared by using the corrected account balances.
  • You then close the books for revenue and expense accounts and start the cycle all over again.

12. The Sales Cycle

Your sales cycle describes the process from selling a product to receiving the payment from a customer. It typically involves three steps:

  • You sell a product or service and then send them an invoice with the final amount to be paid on the due date. This will prompt an income and expense on your income statement.
  • The money that the customer owes you is listed as a trade receivable on your balance sheet.
  • Once you’ve been paid, the trade receivable is now non-existent and placed into your cash flow statement.

13. The Purchase Cycle

The purchase cycle covers the process from buying a product or service until its depletion from your balance sheet.

  • When you purchase a product or service you list it in your income statement for that specific month.
  • A trade liability is then created on your balance sheet, which has to be paid to the supplier.
  • Once the trade liability is paid in-full, you’ll notice a cash outflow to the supplier in your cash flow statement.

14. Loan Proposals

“Approval of your loan request depends on how well you present yourself, your business, and your financial needs to the lender,” writes Alan Haut for the Small Business Administration. “The best way to improve your chances of obtaining a loan is to prepare a written loan proposal or business plan.”

To develop a loan proposal, you’ll need:

  • A copy of both your personal and business credit reports from one of the three major credit bureaus: Equifax, Experian, or TransUnion.
  • To clearly address: how much money your need, how you’ll use the money, how you’ll repay the loan, and what you’ll do if you’re unable to pay it back.
  • Simple and direct cover letter or executive summary.
  • A profile of your business.
  • A description of the experience, qualifications, and skills of each owner and manager.
  • Loan request.
  • Loan repayment.
  • Collateral.
  • Personal financial statements.
  • Business financial statements.
  • Equity investment.
  • Projected income and cash flow statements for at least one year.

15. Different Types of Credit and Funding

If your business doesn’t benefit from a regular term loan from a traditional commercial bank or financial institution like the SBA, you may want to seek funding elsewhere.

  • Venture capitalists invest in startups, but are also considered mentors and partners.
  • Angels investors are early investors or a startup and often will take a piece of your business as compensation.
  • Credit cards, when used sparingly and wisely, can be used to purchase equipment and materials.
  • A/R financing is when you use you accounts receivable to borrow money.
  • Invoice is factoring is similar to A/R financing except that you sell unpaid invoices to a factoring company.
  • Incubators and accelerators are mainly interested in early stage businesses and can also provide mentoring, networking, and even office/manufacturing space.
  • Family and friends are ideal for smaller loans.
  • Microloans are another option if you need to borrow a small amount of money
  • Small business grants are given through the government and do not have to be paid back.
  • Peer-to-peer online lenders, like Lending Club and Kabbage, allow you to reach multiple investors, which means you may be able to secure more favorable terms and interest rates.
  • Crowdfunding through Kickstarter or Indiegogo are popular alternatives lending options to test your business idea.
  • Bootstrapping your business through savings or working a second job.

16. Marketing to Revenue Ratio

“Marketing, including advertising and sales, is necessary for most businesses to earn a profit,” writes Evangeline Marzec for This can vary from business to business, so Marzec suggests that, “Calculating this ratio and comparing it against your industry as a whole is a key measure of how efficiently you’re turning marketing spending into sales revenue.”

To calculate this ratio, you simply “divide total marketing spending by total revenue from sales.” Make sure to exclude revenue that didn’t come from sale activity, such as royalties or interest on savings. When it comes to your marketing costs, this would include: advertising, sales staff, branding consultants, and marketing materials like your webiste.

The reason that this ratio is important is because spending more money on sales doesn’t mean that you’re going to increase sales.

17. Accepting Payments

If you want to remain competitive, then you need to accept a variety of payments. This includes cash, credit cards, debit cards, checks, and electronic cash. Just keep in mind that expanding your payment options may mean that there will be additional costs for your business, such as account fees, transaction fees, equipment rental, and merchant fees based on a percentage of the total sales value. But, that’s just the price of doing business these days. But, to make sure that it’s worth the investment, accept the payments that your customers prefer to use.

When selecting a payment platform, pay attention to:

  • The fee structure that works best for your business.
  • The ability to accept most most major credit and debit cards.
  • Easy-to-use software that integrates with your existing accounting software.
  • How quickly funds are available in your bank account.
  • Whether you have to sign a contract or not.
  • Can you accept international payments?
  • Does the platform provide 24/7 customer support?
  • Is the platform secure? Make sure that it’s fully PCI (Payment Card Industry) compliant.

18. Opening a Merchant Account

If you accept credit cards, then you’re going to have to open a merchant account through your bank or credit union. If not available, you can try a merchant account broker such as 1st American Card Service, Cardservice International, or Merchant Account Express.

By accepting credit cards, you can increase sales by up to 50 percent and accept payments via online, telephone, mail, and in-store. Additionally, having a merchant account gives you the chance to offer recurring or subscription-based billing.

Just be aware that transaction fees can range from 2 to 8 percent on total sales volume.

19. Online Payment Services

Online payment services, such as PayPal and Due, allow the exchange of currency of the internet. It’s the best option if you run an eCommerce site or have global customers. The biggest advantage to online payment services is that it’s fast and easy to set-up; just provide an email address and you’re on your way.

Most importantly, online payment services are affordable. Due, for example, charges a flat 2.8% transaction fee no matter where the payment is going to or from across the world.

20. Establishing Payment Terms

Every business owner needs to establish clear, written payment terms that discuss when payment is expected (the norm is 30 days after the invoice date), acceptable payment methods, discounts that are offered, or any other provisions like down payments or cash advances.

Before working on a project or selling products, make sure that these terms are negotiated early on so that both parties are on the same page. When agreed upon, these terms should be included in formal contracts and printed on your final invoices and monthly account statements.

21. Payment Processing Fees

As previously noted, if you accept credit or debit cards, you’ll be responsible for paying fees, such as:

  • Processing fees that calculated on each transaction (i.e., discount rate, non-qualified rate, card brand fee).
  • Situational fees are charged when a specific event occurs (i.e., cancellation fee, chargeback fee, international fee).
  • Fixed fees are added on top of the processing fees (i.e., annual fee, monthly fee, network access fee).

Credit card fees are based on a number of factors, like the industry you’re in, the type of transaction, credit card type, and processing volume.

As if that weren’t confusing enough, payment processors will use one of the five pricing models:

  • Interchange plus where you pay the interchange rate of the card (the cost of accepting that card) plus a markup which is a fixed percentage set by the provider.
  • Interchange differential is where you pay you pay the qualified rate, the non-qualified fee, the card brand fee and the interchange differential fee.
  • Flat is simply a flat, fixed percentage.
  • Tiered pricing is a structure that categorizes transactions into tiers, with each corresponding to a fee.
  • Billback/ERR is composed of of a flat rate and a fee for all non-qualified cards.

If you want a better understanding of payment processing fees, we’ve put together a handy eBook that explains in more detail these processing fees.

22. Securing Deposits

If you’re in the service industry, such as a freelancer, then it’s in your best interest to ask for upfront payments. This helps maintain a positive cash flow, cover out-of-pocket expenses, and prevents clients from bailing on a payment.

Whether it’s a deposit (preferably one-third to one-half of the total value), a retainer, or recurring payment, asking for a deposit or upfront payment may seem awkward, but as long as you’ve properly set your prices, built trust, are transparent, flexible, and often reassurances like a money-back guarantee, your clients shouldn’t have an issue with paying you in-advance.

23. Extending Credit

There probably isn’t a need to extend credit to your clients or customers unless you’re in an industry where you have recurring clients that you pay monthly or have a contract that will take several stages to complete. This is an advantage since it encourages customers to focus more on relationships than prices. However, if you’re too lenient, this can lead to serious cash flow problems.

If you decide to extend credit to your customers, make sure that you conduct a credit check through the three major credit-reporting agencies; Transunion, Equifax, and Experian. You also need to establish guidelines like knowing who you’re going to extend credit to, when payments are due, how you’ll bill your customers, and how you’ll collect late payments.

24. Debt Collection

Debt collection is an unpleasant, but necessary, consideration if you’ve extended credit or send invoices to clients.

Since you’ve agreed on the payment terms, such as when and how payment is going to be received and any incentives/penalties for late payments, this process should be a bit smoother. However, if payment has not been received and the client is not respond to your phone call or emails, you may be forced to take them to small claims court or send the bill to a collection agency.

25. Employees/Payroll

It’s absolutely necessary for you understand everything you can when it comes to paying your employees. In other words, don’t just write out checks when it’s time for payroll. Consult experts who will guide in making sure that your payroll system is secure and streamlined.

This includes writing checks or automatic deposits, complying with all federal and local tax and insurance requirements, classifying your employees correctly, and setting-up retirement fund financing. Payroll for a growing company is often more complex than anticipated. Staying on top from the beginning can save you untold headaches.

26. Savings and Investments

Whether if it’s saving for an emergency, your retirement, or investing on your business, it’s vital that you make savings and investments a priority. You can do so by following these tips from Bill Hammer Jr., of Hammer Wealth Group.

  • Invest in your business by doing things like making your products or services better.
  • Have liquid assets, which are assets that can be converted into cash quickly.
  • Being conservative with investing in property.
  • Give your business a stress test, like hypothetically seeing what would happen if you lose 25 percent of your business and expenses are 50 percent higher.
  • Consider purchasing a smaller business.
  • Keep your retirement portfolio simple.
  • Diversify your portfolio in order to reduce risk.

27. Paying Taxes

As a business owner, it’s up-to-you to pay taxes. When determining how much you’re responsible for paying, use tricks like:

  • Realizing it’s not as easy as you think, despite the fact that it’s a percentage of your business income. You may also have to factor the federal withholding portion.
  • Stay organized throughout the year including retaining the receipts you will need to make tax preparation a breeze.
  • Use software like electronic invoicing so that you can get paid more quickly, as well as easily track your invoices.
  • Hire an accountant or tax advisor to at least prepare your taxes.

28. Tax Deductions

As a business owner, you’re entitled to a number of tax deductions, many of which are often overlooked. These include:

  • Home office deduction.
  • Accounting fees.
  • Auto and transportation fees.
  • Losses on bad debts.

Again, speak with a financial or tax advisor to find out what you can deduct and what you can’t.

29. Know Your Bottom Line

What is the minimum amount that you need to keep your business open? If you’re not sure, then create a budget that lists all the expenses that you expect your business to pay, as well as forecasting your revenue. This will guide you in making more informed financial decisions.

Furthermore, if you know how low your funds can go, you’ll be more prepared to catch any potential issues before they become a crisis.

30. Using Technology to Your Advantage

Don’t be afraid of technology. Embrace it. There are scanners like Shoeboxed that allow you to scan, store, and organize all of your receipts. It even integrates with Quickbooks.

Due offers an innovative time tracker, electronic invoicing platform, and digital wallet so that you can easily send estimates, invoices, and transfer funds. It also integrates with platforms like Quickbooks.

There are also manage management apps, like Mint and Pocket, that allow you to create and set budget, conduct all of your banking needs, receive personalized investment advice, and prepare your tax return.

31. Finding an Accountant

When it comes to the finances of your business, things can get complicated and tricky. That’s why you should consult an accountant before making any big financial decisions or when tax season arrives.

If you don’t have an account, you can do a quick Google search to find accountants in your proximity. But, to find the best accountant for your business, think about:

  • Your business needs.
  • Whether you’re hire a full-time accountant or outsource.
  • Their qualifications, experience, reputation, and response time.
  • What other services they offer.
  • If they can provide advice that can help your business grow.
John Rampton

John Rampton

John Rampton is an entrepreneur and connector. When he was 23 years old, while attending the University of Utah, he was hurt in a construction accident. His leg was snapped in half. He was told by 13 doctors he would never walk again. Over the next 12 months, he had several surgeries, stem cell injections and learned how to walk again. During this time, he studied and mastered how to make money work for you, not against you. He has since taught thousands through books, courses and written over 5000 articles online about finance, entrepreneurship and productivity. He has been recognized as the Top Online Influencers in the World by Entrepreneur Magazine and Finance Expert by Time. He is the Founder and CEO of Due.

About Due

Due makes it easier to retire on your terms. We give you a realistic view on exactly where you’re at financially so when you retire you know how much money you’ll get each month. Get started today.


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