Bookkeeping

As each month passes, one rent payment is credited from the prepaid rent asset account, and a debit is made to the rent expense account. This process is repeated as many times as necessary to recognize rent expense in the proper accounting period. This adherence to the matching principle of accounting provides a more accurate picture of a company’s financial health. From the perspective of a diligent accountant, adjusting entries are not just routine bookkeeping; they are a testament to the integrity of the financial statements. For a business owner, these adjustments translate to a clearer understanding of the monthly costs and can significantly impact budgeting and financial planning. When it comes to managing financial statements, the allocation of prepaid rent is a critical aspect that requires meticulous attention.

The Accounting Equation

Prepaid rent is, therefore, a type of prepaid expense; the payment of rent made before the rental period to which it is related. In this article, we will discuss what type of account prepaid rent is and how it is recorded. Deferred assets can include prepaid expenses, deferred charges, and other assets. Prepaid expenses are payments made in advance for goods or services that will be received in the future.

This is done through an amortization entry that reduces the prepaid rent account and records the rent expense for that month. Continuing with the previous example, if the $12,000 covers 12 months of rent, the monthly amortization would be $1,000. The corresponding journal entry each month would be a debit to rent expense for $1,000 and a credit to prepaid rent for the same amount. This entry moves the expense from the balance sheet to the income statement, reflecting the consumption of the rental benefit over time. The monthly amortization ensures that the expense recognition aligns with the period in which the space is utilized, maintaining adherence to the accrual basis of accounting.

Types of Liabilities:

The adjusting journal entry is done each month, and at the end of the year, when the prepaid expense has no future economic benefits, the prepaid expense balance would be zero. When a business pays for an expense in advance, it records a debit to a prepaid expense account (an asset) and a credit to a cash account (also an asset). Prepaid expenses are also known as prepaid assets because they represent the value of the goods or services that will be received in the future.

Deferred Assets and Revenue Recognition

From the perspective of a tenant, allocating prepaid rent over the lease term involves a monthly recognition of rent expense. To illustrate, consider a company that signs a lease agreement where the landlord requires the first and last month’s rent as a deposit. If the monthly rent is $2,000, the company will record a prepaid expense of $4,000. This amount will not be expensed until the company occupies the space in the first and last months of the lease term.

What is Prepaid Accounting?

It is essential to accurately record prepaid rent to ensure the financial statements reflect the true financial position of the company. For example, when a company prepays for an annual insurance policy, the full payment is initially recorded as a prepaid asset. Each month, a portion of that cost is recognized as an expense, ensuring the financial statements accurately reflect when the benefit is received. Other common prepaid expenses include rent, software subscriptions, maintenance contracts, and even regulatory payments like taxes and utilities.

Focus on these best practices and watch your current assets’ accuracy flourish. Deferred revenue is revenue that a company has received but has not yet earned. By subtracting deferred revenue from deferred expenses, a company can determine the amount of deferred assets that it has. These assets are recorded on the balance sheet and are recognized as revenue when they are received. The calculation of deferred assets is important because it allows a company to determine the amount of revenue that it will receive in the future.

Prepaid rent can be considered a deferred asset because it represents a cost that has been paid in advance and will be incurred as an expense in a future period. It is deferred on the balance sheet until it is expensed on the income statement. Yes, prepaid rent is classified as an asset on the balance sheet of the tenant until the rent period comes due. It is considered a current asset because it is expected to be used up within one year or one operating cycle, whichever is longer. Recording prepaid rent properly ensures financial statements reflect true business activities. This advance payment reflects not just an immediate exchange but rather a future benefit awaiting consumption.

Reconciling prepaid expenses often takes significant time and can be prone to manual errors. Accounting software addresses these challenges by automating repetitive tasks and delivering accurate, real-time financial data. Automating the tracking of prepaid expenses ensures that amortization schedules are consistently applied, which reduces errors and builds trust in financial reports. Your business thrives on the rhythm of daily commerce, and current assets are the drumbeat propelling it forward. They’re the financial reserves that stand at attention, ready to transform into cash for your daily transactions. Need to restock office supplies, pay your team, or cover unexpected vendor payments?

Deferred charges are costs that are incurred to obtain a long-term benefit, such as the cost of developing a new product. Other deferred assets can include deferred tax assets, deferred financing costs, and deferred revenue. Analyzing prepaid rent also involves considering its impact on a company’s cash flow and liquidity. By paying rent in advance, a company may experience a temporary cash outflow, which can affect its short-term liquidity. However, prepaid rent can also provide a sense of financial stability and predictability, as it ensures that the company has a place to operate without the worry of monthly rent payments. It is essential for businesses to strike a balance between managing their cash flow and maintaining a stable operating environment.

The initial journal entry for prepaid rent includes a debit to the prepaid rent asset account and a credit to cash or bank. Subsequent adjusting entries involve a debit to the rent expense account and a credit to the prepaid rent asset account. As a current asset, prepaid rent usually provides value to a business over several accounting periods (usually six months or a year). When done right, prepaid reconciliation is a seamless accounting process that ensures accurate financial reporting and compliance.

Deferred assets can include prepaid expenses, deferred revenue, and deferred tax assets. It is important to note that deferred assets are different from prepaid expenses, which are expenses that have been paid in advance but have not yet been incurred. Prepaid expenses are recorded as assets on the balance sheet, but are recognized as expenses in the current period’s income statement.

• Deferred assets are an important aspect of accounting, and it is important to understand how they relate to accounting income and taxable income.
• Deferred assets can include prepaid expenses, deferred revenue, and deferred tax assets.
• However, postpaid rent may be a better choice if you prefer more flexibility and budget every month.
• It is considered an asset because the company has already made the payment, and it has future economic benefits.
• Prepaid expenses are the future expenses paid in advance and treated as a current asset on the balance sheet until the expenses are incurred.

Account

Hence, prepaid rent is first recorded as a current asset on the balance sheet and as it is used up, it is recorded as an expense on the income statement. This prepaid rent account on the balance sheet helps to show that the company has an asset that will benefit the business in the future. The cash paid for prepaid rent is a crucial indicator of the company’s liquidity and cash requirements. Stakeholders can assess how much cash is tied up in prepayments and evaluate the company’s ability to manage its cash flow effectively. Unlike the balance sheet and income statement, the cash flow statement does not include the subsequent monthly amortization of the prepaid rent.

When prepaid rent is paid by the tenant, it is recorded as an increase in the current asset account, prepaid rent. Once prepaid rent is is prepaid rent a current asset used when the monthly rent is due, the tenant will record a decrease in prepaid rent and an increase in rental expense. The decrease in prepaid rent would show on the balance sheet as lower current assets and increased rental expenses on the income statement.

The law may limit the maximum amounts allowed for prepayment each month or particular payment methods accepted for prepayment. Some landlords may charge additional fees for accepting prepayment or simply refuse this type of arrangement altogether due to the potential risk from a legal perspective. Prepaid rent can be a great way to avoid the need for paying monthly rental fees. Unfortunately, it comes with certain drawbacks that tenants should be aware of before deciding to accept the option. Compare prepaid expense balances in the general ledger with amortization schedules.

• This prepaid rent account on the balance sheet helps to show that the company has an asset that will benefit the business in the future.
• Oftentimes, this entry should not be adjusted in lease accounting software and will clear itself up in the following month.
• When an organization makes a large payment that covers several months, it could be considered a remeasurement of the Lease Liability and ROU Asset and should be accounted for as such.

This ensures proper tracking of financial obligations and maintains accurate financial statements. To keep your asset calculations accurate and efficient, start with regular updates to your financial records; timeliness ensures relevance and precision. Implement robust inventory management systems—they’re your frontline in preventing overstocking and understocking, which can skew your calculations. Adopt accounting software or asset management tools to streamline processes and minimize the room for error inherent in manual calculations. Furthermore, it’s wise to perform periodic reconciliations, cross-checking the books against physical counts and bank statements to catch and correct discrepancies.

When a company pays rent in advance, it results in an outflow of cash, which is recorded in the operating activities section. This outflow reflects the immediate use of cash resources for a non-current benefit, which is the future use of the rental space. The process of accounting for prepaid rent involves specific journal entries that capture the initial transaction and the subsequent monthly recognition of rent expense. These entries are fundamental to maintaining the integrity of financial records and ensuring that the financial statements accurately reflect the company’s economic activities.

Stockholders’ equity statements play a crucial role in reflecting changes in ownership and capital structure. When ownership changes occur, such as through the issuance or repurchase of shares, these transactions must be accurately recorded to ensure the equity section of the balance sheet remains precise. Proper accounting for these changes helps maintain transparency and provides stakeholders with a clear view of the company’s financial health. Overall, analyzing a company’s financial statements requires a combination of technical expertise and a deep understanding of the broader business landscape. By carefully examining financial information, free cash flow, structure, risk, and efficiency, investors can make informed decisions and maximize their returns.

Additional Profits & Losses

• Stockholders’ equity is important because it provides insight into the financial health and stability of a company.
• If you need to find total common equity on a financial statement, you can do so fairly easily.
• It highlights the variations in equity starting from the initiation till the completion of the accounting time.
• However detailed information on those fixed assets is not included in the statement of financial position.
• By maintaining precise records, companies can provide reliable information to investors and other stakeholders, fostering trust and informed decision-making.
• Financing activities refer to the company’s sources of funding, such as debt and equity.

Shareholder’s Equity represents 67.6% of their assets while Liabilities represent 32.4% of their assets. Cash dividends should be reported on the Statement of Shareholders’ Equity Cash Flow Management for Small Businesses as a deduction from retained earnings. There are many other possible sorts of elements that could be in a statement of change in equity.

Track changes in equity components:

Analyzing trends and historical data helps identify patterns, assess growth, and evaluate the impact of past decisions on the company’s equity. Debt financing involves borrowing funds how to calculate total equity that must be repaid with interest, while equity financing involves raising capital by issuing shares. Shareholders’ equity is, therefore, essentially the net worth of a corporation. If the company were to liquidate, shareholders’ equity is the amount of money that would theoretically be received by its shareholders.

Key Takeaways

Stockholders’ equity is the value of a company’s assets left for shareholders after the company pays all of its liabilities. The total equity of a company can be found on its balance sheet, typically under the equity section. This gives you a real insight into the value and ongoing profitability of your business. Knowing where your business stands helps you make better-informed decisions in running and growing your business. If a company’s equity is negative for a prolonged period of time, it can amount to balance sheet insolvency.

Income Statement (Profit & Loss Statement)

• Non-Current AssetsThese assets, also called long-term assets, are critical for a company’s success but cannot be converted into cash within the firm’s fiscal year.
• Current liabilities are debts typically due for repayment within one year.
• Stockholders’ equity, also known as shareholders’ equity, represents the residual interest in the assets of a company after deducting liabilities.
• It plays a role in financial ratios and informs decisions about funding, credit, and valuation.
• This reduces the number of outstanding shares and increases the value of remaining shares.

Dividend payments dispensed or declared throughout the period can be subtracted from stockholder equity as they signify the delivery of capital characterized by the shareholders. The effect of correction of previous period faults must be obtainable distinctly in the statement of changes in equity as retained earnings balance sheet an alteration to the initial investments. It is essential to note that the opening balance is unadjusted as it is taken from the previous period of the report of financial position.

What are key ratios and metrics for analyzing stockholders’ equity?

There are a few common components that investors are likely to come across. Home equity is often an individual’s greatest source of collateral, and the owner can use it to get a home equity loan, which some call a second mortgage or a home equity line of credit (HELOC). An equity takeout is taking money out of a property or borrowing money against it. Allocate earnings accurately based on the proportion of ownership, ensuring your financial disclosures are detailed and transparent.

If the company ever needs to be liquidated, SE is the amount of money that would be returned to these owners after all other debts are satisfied. This account includes the amortized amount of any bonds the company has issued. Conceptually, stockholders’ equity is useful as a means of judging the amount of money that a business has retained. Below is a break down of subject weightings in the FMVA® financial analyst program.

InvestingPro offers detailed insights into companies’ Degree of Financial Leverage including sector benchmarks and competitor analysis. It can be referred to as a consolidated statement as it shows non-controlling interest. The Statement of Changes in Equity plays a critical role in reconciling the beginning and ending balances of equity reported in the Balance Sheet. The primary purpose of the Statement of Changes in Equity is to track and report changes in the various equity components. Further, it is vital to monitor for any modifications in the accounting plan.

Noted to a financial statement is practically drafted in a Word file, and at the time the four financial statements are finalized. This is the mandatory requirement by IFRS that the entity has to disclose all information that matters to financial statements and help users better understand. In the accounting equation, assets are equal to liabilities plus equities. The revenues present in the income statements are the revenues generated from both cash sales and credit sales. In the revenues section, you could know how much the entity makes net sales for their covering period.

If your company performs a sale and according to business policy you have to pay a commission for it, this is recorded as an expense the moment the sale happens. Recognize revenue when it is earned, regardless of when payment is received, matching related expenses accordingly. In the case of legal fees, you could speak with your attorney and ask them to provide their opinion. However, occasionally, you may encounter a cost that’s not typical for your business. Contingent liabilities ensure that financial statements account for risks, even when outcomes are uncertain.

Additionally, collection of substantially all consideration must be probable. Businesses use immediate recognition for any of their period costs, such as administrative expenses, sales commissions, general operating expenses, utility costs, as well as other incurred expenses. By doing this, Becky was following the expense recognition principle and the matching principle. The Expense Recognition Principle is not merely an accounting rule—it’s a cornerstone for producing accurate, reliable, and transparent financial statements. Expense management isn’t just about recording costs—it’s about optimising them.

Your stakeholders want to understand your company’s financial performance, and they’ll use the information to make important decisions that impact your business. When you keep meticulous records of your company’s financial transactions, you’ll find it easier to explain your company’s financial health to stakeholders. It’s not uncommon for business owners to make accounting mistakes, such as recording costs in the wrong period or counting revenue they haven’t earned. While those errors may seem innocuous, they can lead to serious issues, such as underpaying your business taxes. This principle is fundamental in preparing financial reports that comply with GAAP and provide meaningful insights into a company’s operations.

Why is the Expense Recognition Principle especially important for startups and small businesses?

These categories are essential for understanding the company’s financial dynamics and for conducting a thorough analysis of its operational results. Expenses are generally divided into operating expenses, non-operating expenses, and capital expenditures, each with distinct characteristics and implications for financial reporting. As your business determines how to manage its expenses, it’s crucial to examine the big picture. One of the best ways to do so is to set a foundation of systems, principles and tools for your expense management process.

• The collapse of high-profile companies due to accounting scandals is a stark reminder of the potential consequences of unethical accounting practices.
• This ensures that any gains or losses due to exchange rate fluctuations are recognised accurately.
• This principle ensures that financial statements provide an accurate reflection of profitability by showing the relationship between costs and revenue.
• Accurately categorizing expenses is vital for financial reporting but can get complicated.
• Accounting teams should be well-versed in any amendments or changes in accounting policies to ensure they understand their roles and responsibilities.
• The role of technology cannot be understated, as automation has become crucial for maintaining accurate revenue recognition, particularly for companies with complex revenue streams.
• This process mirrors depreciation but is specifically used for intangible assets.

When Should I Use the Expense Recognition Principle?

Technology solutions have become increasingly important for managing revenue recognition effectively. Modern revenue recognition software can automate calculations, implement workflow approvals, and maintain detailed audit trails. These tools help reduce errors and increase efficiency while providing better visibility into the revenue recognition process. Internal controls play a crucial role in ensuring proper revenue recognition. Organizations should design both preventive and detective controls specifically for revenue recognition processes.

Common Challenges in Expense Recognition

Make resources like manuals or online courses available to facilitate and support their learning process and promote a culture of compliance and accountability. Organizations must carefully evaluate oral agreements to determine when they constitute valid contracts. They need to assess how to handle contract modifications and change orders effectively.

For instance, a construction project may involve various phases, each with unique costs and revenue implications. Suppose company accounting coach cash flow statement X paid 13-month rent amounting to $ 13000, and per month rent is $ 1000. Let’s say a business incurred $50,000 in labor costs for the production of its products during the last quarter of 2023. However, some employee paychecks weren’t sent out until after the last day of the year. For instance, capitalizing an expense may lead to higher profits in the short term, while expensing it immediately would reduce profits but provide a more conservative view of ongoing operations.

Matching Expenses with Revenues

This step requires careful analysis to determine distinct promises within the contract. According to Deloitte’s revenue recognition survey, this step often presents the biggest challenge for organizations. These expenses are generally recognized immediately because it is hard to connect these expenses to any future revenue or benefits. The journal entries recorded earlier in this article show a method of expense recognition called cause-and-effect.

The Matching Principle

These rules help maintain consistency across reporting periods and among different entities, allowing stakeholders to make informed decisions based on reliable data. To understand the expense recognition principle, it’s essential to know the difference between cash and accrual accounting. Rules and practices govern both accounting types, including how to use 10 characteristics of financial statements its types features and functions them and who can use them.

Operating Expenses

Organizations are increasingly focused on contract management and modification tracking, while automated solutions become more sophisticated. The integration of blockchain technology and smart contracts promises to bring new capabilities to revenue recognition processes, potentially enabling real-time recognition and enhanced analytics. Effective revenue recognition requires robust documentation of policies and procedures.

• These methods allow for higher depreciation expenses in the early years of an asset’s life and lower expenses later on.
• If a business were to instead recognize expenses when it pays suppliers, this is known as the cash basis of accounting.
• Each expense must be carefully recorded to reflect its economic purpose and relevance to the business.
• Aggressive accounting policies focus on maximizing reported income and financial performance.
• Failing to adhere to the principle can lead to problems with your financial statements and tax returns.
• With accrual accounting, a business abides by the expense recognition principle and recognizes revenue and expenses in the same period.
• Used for expenses that benefit multiple periods, such as depreciation of assets, amortization of intangibles, or allocation of prepaid expenses.

IU’s income statement shows its real profits by lining up revenue with the right expenses. This method records the $15,000 tuition for each undergrad per semester when it’s rent receipt template earned, not when it’s paid. This matches up with the revenue recognition principle, making sure income statements truly show IU’s financial health at any time. While the expense recognition principle deals with expenses, the revenue recognition principle governs when to record revenue. Both are essential for accurate financial reporting, as they work together to represent a company’s performance in a given period. By focusing on these areas, businesses can ensure their financial reporting is accurate and compliant, providing stakeholders with reliable insights into their financial health and performance.

Advertising expenses incurred for a marketing campaign would be recognized as expenses when the campaign is launched, reflecting the period’s benefit to revenue generation. For instance, a company purchases a delivery vehicle for $20,000 with an estimated useful life of five years and no salvage value. Under the straight-line depreciation method, the company recognizes $4,000 ($20,000 divided by 5 years) in depreciation expense for each year. This expense is recognized evenly throughout the year, reflecting the vehicle’s gradual wear and tear over time. Your organization’s tax return sources information from your financial statements. You may incur unexpected fines and penalties even if the underpayment is accidental.

The right option for you depends on how established your business is, as well as other factors, such as why you need capital and how fast you need it. The SBA website also offers a lender match tool to help connect you with financial institutions in your area. There are multiple types of SBA loans available, including SBA 7(a) loans, SBA 504 loans and SBA microloans. The most popular of the SBA loan programs, 7(a) loans can be used for a wide variety of purposes and are available in amounts up to $5 million. Consider hiring a certified public accountant (CPA), bookkeeper, or using an online service.

Evaluate your purchase, liability, credit, and interest needs when considering using a business debit or credit card. Business loans from traditional financial institutions, like banks and credit unions, remain a popular way to borrow money. For well-qualified borrowers, the interest rates with traditional business bank loans tend to be a more affordable option. Gone are https://www.quick-bookkeeping.net/ the days of having to visit a brick-and-mortar financial institution to take out a business loan. Today, it’s easy to find online nonbank lenders that offer business loans that you can apply for in the comfort of your home or office. If you want the most affordable type of debt financing and you have strong qualifications, a bank or SBA loan might be your best option.

Why would you need a business loan?

We’ll start with a brief questionnaire to better understand the unique needs of your business. This website is using a security service to protect itself from online attacks. There are several actions that could trigger this block including submitting a certain word or phrase, a SQL command or malformed data. You may need short-term finance to get up and running, with longer-term finance to keep you afloat through the first couple of years. Think like a chess grandmaster and plan your moves out long in advance. Just be aware of conditions that might require collateral or other constraints on your end — a general rule for loans of all kinds.

Sound financial management is at the heart of every business, no matter how big or small. Without it, even viable and potentially profitable businesses will fail. There’s no guaranteed way to get venture capital, but the process generally follows a standard order of basic steps. Every business has different needs, and no financial solution is one-size-fits-all. Your personal financial situation and vision for your business will shape the financial future of your business.

1. Grants do not have to be repaid and are available from government agencies, corporations and nonprofits.
2. For entrepreneurs who chose a business loan, inventory accounted for the biggest allocation of funds.
3. Start by contacting a bank with which you have an existing relationship.
4. Small-business grants are offered by federal and state agencies, as well as private corporations.
5. For that reason, 46% of entrepreneurs drew from personal savings and avoided financing to launch their businesses.

This simple cashflow template and accompanying article from the Association of Chartered Certified Accountants includes everything you need to know. Supply chain disruptions and volatility have impacted retail, restaurants, and healthcare. Budgeting, accounting, forecasting, tax planning, risk management — these are important aspects of managing your business finances as part of a comprehensive financial plan. Of course, the interest rates on credit cards can be high, even for well-qualified applicants.

Get a small business loan

See how Square works, and get more expert guidance for the next era of small business. You also want to select a pay schedule that follows all state guidelines, and gives you and your team the most financial autonomy. An ideal pay schedule coincides with when you have cash coming in and allows you to pay your team as frequent as possible. When employees can get paid soon after they earn it, whether it’s weekly or instantly, they can make more informed financial decisions.

Another big step in managing your small business’s cashflow situation is choosing appropriate payment terms. Many businesses that sell directly to the end customer take payment immediately. For example, a restaurant is paid once the customers finish their meal, while a plumber or electrician will expect to be paid as soon as their work is done. These days, your accounting software should have a cashflow statement as one of its standard reports. However, if not, these documents are very easy to create yourself and do not require any prior accounting experience at all.

With a business line of credit, you can draw from a set limit of funds and pay interest on only the money you borrow. Lines of credit are often used to manage cash flow, buy inventory, cover payroll or serve as an emergency fund. This type of government funding can be a good option if you’re an established business with good credit but you can’t qualify for a bank loan.

What do you need to get started?

Small-business grants are offered by federal and state agencies, as well as private corporations. To help you find a good fit, here’s an overview of the most https://www.bookkeeping-reviews.com/ common financing options for small businesses — and where to get them. There are many strategies for preparing financial statements for a small business.

Consider investing in professional financial guidance.

That third party—a factoring company—gives you a portion of the money upfront in exchange for those invoices. Then, it collects payments from your customers and gives you the remaining balance minus a percentage called a factor fee. Business credit cards represent another flexible way to access financing and establish business credit.

Put Financial Management at the Heart of Your Business

One of the most difficult periods for cashflow is in the early days of your business. While you’re busy setting up the business, you will have many expenses but no clients or customers to create an income stream. Staying on top of your business finances is an important aspect of maintaining positive https://www.online-accounting.net/ cash flow and financial stability. If you’re lost when it comes to proper accounting and business funds or resource management, you might find yourself unable to invest in or grow your business. Small business grants represent a funding option that can be attractive to any business owner.

Our articles cover topics like establishing an internet presence, using social media to post pictures of your food, and increasing the number of reviews your business has. There will always be business issues that need to be addressed today, but when it comes to your finances, you need to plan for the future. “If you’re not looking five to 10 years ahead, you are behind the competition,” said Tina Gosnold, founder of QuickBooks specialist firm Set Free Bookkeeping. Here are a few things you should do as a small business owner to stay on top of your finances. Do not hesitate to negotiate with suppliers and ask for discounts when you place bulk orders.

That figure dropped to 55% after March 1, 2020 (but so did the approval percentages with other financing sources at that time). Among all funding methods, $25,001 to $55,000 was the most commonly reported funding amount used to start a business. Thirty-seven percent of entrepreneurs who chose business loans and 21% who drew from personal savings relied on this amount to fund their venture. Business credit cards can be a good funding option for startups because they offer quick access to capital and most entrepreneurs with good personal credit can qualify. You may not want to completely fund your business with a credit card, however, because overspending can lead to expensive debt that’s difficult to repay. Some of the most common sources of small-business financing include banks, credit unions and online lenders.

For businesses that want a flexible line of credit, Bluevine, OnDeck and Fundbox each offer competitive products. These institutions, in particular, are a great resource for small-business loans because they often have a strong interest in economic development in the community. If you want to avoid taking out a business loan, or simply can’t qualify for any debt financing options, there are several ways to fund your business that don’t require debt.

The average credit card interest rate for Nov. 2021 was 14.51% (based on Federal Reserve data for accounts that assessed interest). Business credit card interest rates may be somewhat higher, but they also depend on your personal credit rating and other factors. This program offers funding opportunities in the federal innovation research and development arena.

Take a close look at all of your business expenses (direct and indirect) and overhead costs (fixed, variable, and semi-variable) to calculate your overhead rate, and monitor it on a regular basis. Review your business reports, and assess your core business and financial operations in relation to your sales and operating margins. Don’t hold off on analyzing accounting reports and financial statements to gain insight into your business’s performance. Michelle Lambright Black, Founder of CreditWriter.com and HerCreditMatters.com, is a leading credit expert and personal finance writer with nearly two decades of experience in the credit industry. She’s an expert on credit reporting, credit scoring, identity theft, and the intersection of credit and financing. You can connect with Michelle on Twitter (@MichelleLBlack) and Instagram (@CreditWriter).