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When You Need a Personal Financial Statement

As you think of starting a new business to improve your current income or expand your current business portfolio, you need several financial documents before beginning this new venture. As we all earn a certain amount of salary at the end of every month, it may shock you that you may end up spending more money than you truly earn. This means that you may end up spending your savings without even realizing it to cover the difference. To avoid such a scenario, you can start keeping personal financial statements and strictly updating them on a daily or weekly basis.

By properly managing your personal financial statement, you will have better budget planning and provide a clear picture of your current financial condition.

If you have a sound and updated financial statement, it will significantly favor you when presenting your documents to potential banks, landlords, property buyers or even financial investors. This is a good example when need to use personal financial statement.

 

Types of Personal Financial Statements

When it comes evaluating the types of personal financial statements you require, there are two important types of personal financial statement that you can use: personal balance sheet and a personal cash flow statement.

The cash flow statement primarily measures any cash outflow and inflow you incur during a specific period to determine your actual net cash flow. Cash inflow includes salaries, dividends, interest earned, and capital gains while cash outflow includes entertainment bills, utility bills, and grocery expenses. It is imperative to have a positive net cash flow as shows you spend less money than what you earn. This provides you with the opportunity to have some cash set aside for savings or emergencies. On the other hand, a balance sheet displays a summary of your accrual wealth over a specific period.

This statement provides a summary of all your assets, liabilities and your current net worth.

 

When are these statements required?

These personal financial documents play a huge role in numerous financial activities and processes. In most cases, you will require additional funding when starting up a new business venture so as not to completely deplete your savings. This requires you to approach various banks and investors to assist you with the needed funds. This is when need to use personal financial statement. Therefore, when you present your business loan request or business plan to a financial institution or lender, it is important to include your personal financial statements in the form of a personal financial statement PDF among other mandatory documents.

Your financial documents strengthen your credibility when approaching the borrower as they show your new cash flow and net value.

These documents also showcase your current and timely cash inflow, which helps assure the borrower that you will not have any problem in repaying the requested loan. The personal statement will also show the borrower that you have enough cash reserves to cover the requested loan, thus reducing the pressure when considering giving you the loan.

 

Other than just presenting your financial document as a personal financial statement PDF to the lender, you should make sure you accompany it with all documentation of ownership (and any liabilities if they exist). These supporting documents significantly support your personal financial documents and help quicken a loan processing process. Finally, you should ensure that you enter accurate information when preparing your personal financial statements. This makes sure that every detail recorded and presented to the bank or investor is factual and avoid cases where a loan approval process is halted, suspended or canceled because of inaccurate information.

In the end, perfectly prepared financial statements will help you get the loan you need for your new start-up.

Taxes that Bar and Restaurant Owners Face

Purchasing a bar or restaurant can be a fun and profitable investment. However, it’s important to keep in mind the requisite taxes for owning a bar or restaurant, as these are part of the financial responsibilities that owners face. Here is a guide to the various taxes that you’ll need to pay for owning a bar or restaurant, as well as brief explanations of what each tax entails.

 

Sales Tax:

Like most businesses, bar owners and restaurant owners are required to pay a sales tax, which applies to any food that is prepared and sold to customers, as well as most beverages. Each individual sale has a tax applied to it, although food that you purchase for later retail doesn’t have sales tax applied by your supplier.

 

Job and Family Service Taxes:

Under Ohio state law, employers must register for an employer account number with the Department of Job and Family Services. (Registering as an Employer) This department regulates unemployment compensation taxes, which are paid by business owners. Once you receive an employer account number, you will be notified of the required contribution rate for this tax.

 

Workers Compensation:

Taxes for owning a bar or restaurant also include paying for Workers’ Compensation insurance, which are regulated by the Ohio Bureau of Workers’ Compensation (BWC.) Premium rates for workers’ compensation are decided by the BWC.

 

Payroll Taxes:

Payroll taxes are a major concern for any business owner, as unpaid payroll taxes actually cause more closures than unpaid income taxes. How do payroll taxes work? When you pay employees, federal income taxes, state income taxes, medicare, and other deductions must be withheld, and employers are responsible for the withheld taxes–this is what a payroll taxes is.

However, bar owners and restaurant owners can face payroll tax complications due to tip income for their employees. You are required to report tips that employees receive and pay social security and medicare taxes on tip income, but employees rarely report the entirety of their tips, and it’s difficult to track tips that aren’t put on credit cards. (Payroll Taxes) Because of this, you may end up liable for more than expected in a tip audit, although the IRS usually won’t question tips reported if they are 8% or more of wages.

 

City Taxes:

City taxes, sometimes referred to as municipal taxes, are paid in addition to federal income taxes and are regulated by the town or city your business is located in. While many cities don’t impose a local income tax, you’ll want to check city tax policies before purchasing a bar or restaurant.

 

Property Taxes:

Another of the taxes for owning a bar or restaurant is the property tax, which can vary greatly depending on the value of property where you live and how much tax revenue the various local, state and federal councils determine is needed. Property tax values also vary depending on an individual city’s need to pay for education, transportation, emergency services and parks, which are among the services usually funded by property taxes.

 

Liquor License:

Although it is not actually a tax, bars, and restaurants that serve alcohol, must renew their liquor license each year for a fee, which is paid to the state. Renewing your liquor license is required to sell alcoholic beverages in Ohio, just as it is in other states.

If you have questions or concerns about any taxes paid by bar or restaurant owners, you can contact Sokol and Associates, a brokerage firm based in Columbus, Ohio. Our expertise can help you navigate the taxes and fees required for owning a bar or restaurant in Ohio.