Small Biz Millionaire Ep. 7: Language of Business

Language of money.
The language of money is probably the most important language that you really can learn.
And that's in business and that's in personal. Today I just want to talk about, I printed off about 17-18 different terms and I just figured these are some of the top terms that you need,
but this is just the start guys.
#1: Accounting: Accounting is something that you do, you keep track of all your money's coming in
and now your money's going out. You have to understand where the trail is of where your
customers are sending your money in through credit cards, checks, however you're getting your money, but you have to keep tracking.
- Accounts Payable. This is money that you owe to your vendors, money that you owe to your landlords, money that you owe to the banks. This is money going out.
-Accounts Receivable: that's money that's owed to you. That's money your customers owe you, that you've worked for, and they're going to pay you with like I said a credit card, or a check. I knew pretty much exactly what everyone owed me. You got to keep up with that.
-Assets: I just broke it down real easy, an asset puts money in your pocket.
What puts money in your pocket? Asset covers a wide range of things,
an asset could be a building this paid for, an asset could be tools and equipment that's paid for,
an asset can be a machine shop, duck machine, a sewer viewer, anything like that.
-Liability: We all know what liability is. That takes money out of your pocket. A liability is anything that cost you money.
One thing that is a constant liability is your your rent or your mortgage for your building, can be your electric bill, your water bill, it could be a truck payment. It could be a bill that you owe your vendors, that's a liability.
-Revenue: what is revenue? That's really what we're all working for-is revenue and that's income received from customer service. Revenue is the money coming in from your services.
I am an HVAC company and I'm out servicing equipment, I'm out replacing the equipment,
my customers were paying me, that's revenue.
Always pay yourself a wage, okay.
-Retained Earnings: That's moneys left over after all the taxes, liabilities are paid -
and I put use for buying assets. So what I would do at the end of the year, I would work
and we'll just do an example of $100,000.
After the end of the year I've paid all my employees, and I paid all my vendors, and I paid all my taxes. I had everything paid for and I had 20,000 dollars left over, let's say. I would put that into a separate account and I called that retained earnings. That money did not create a tax event
it was like a layer of business savings, okay, which I didn't use for business. That's another story.
-Marketing. When you get into a business, marketing is something we have to do almost from day one. First of all, the biggest thing your marketing is yourself.
I am the one that's creating the business. I'm the one that's giving birth and life to this particular entity, and the first thing I have to market is myself.
But marketing is websites, UA-cam, Instagram, Facebook, Marketing is “engage to influence customers.”
-Capital: What is capital? Capital is cash used to create wealth. A lot of businesses
when they start, they start with an initial capital investment.
A lot of times it's your own personal money, sometimes depending on the business you may take on partners.
EIN Number: Employer Identification Numbers
Audit. Ae put everything on QuickBooks,
but when you get audited, if you don't have your ducks in a row
and everything is not really accounted for,
Balance Sheets: Balance sheets are a snapshot of business
of assets and liabilities. Assets minus liabilities equal Equity.
Equity: Equity is money you have invested in your business. Equity is, a lot of it is goodwill,
marketing, trucks, tools, advertising expenses. Equity is assets minus liabilities equal Equity. That shows the value of your business.
Depreciation: Lifetime of useful life of assets such as equipment and buildings.
Basically when you do your accounting, your accountant is going to say, you bought a truck,
you get maybe a five year depreciation. You bought a building, you get a 30 year depreciation.
You bought a specific piece of equipment, you get a ten year depreciation.
Depreciation is helpful on your taxes.
Income Statement: That's the profit and loss.
A financial statement really shows, if you need to make changes or anything like that, it shows you what you need to do.
Fiscal Year: Fiscal year lot of times for businesses is January 1st through December 31st.
Folks, If you like this video please share,
please subscribe, and please comment. Thank you for watching.

[@user-vb8jl6nf4k]

Can’t believe not much comments and like on this series

[@luiselizalde6757]

Excellent thanks David, keep going.

[@jonesacnaples]

Thank you
I’m here to help