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Published September 07, 2023
A monthly look at issues facing Wyoming business owners and entrepreneurs from the Wyoming Small Business Development Center (SBDC) Network, a collection of business assistance programs at the University of Wyoming.
By Rob Condie, Wyoming SBDC Network reginal director for Lincoln, Sublette, Sweetwater and Uinta counties
There are many things you need to be aware of right away when launching a small business. One of those things you must know to be successful is the difference among the top five financial account subcategories. Having this knowledge will help you understand any reports pulled on the business and, in turn, help you know what they mean to you as the owner of that business.
Many of the business owners I run across say that the biggest headache they have is bookkeeping, and most are new to these five subcategories. So, let’s break them down a bit:
-- Revenue: Revenue is money coming into the business.
-- Expenses: Expenses are transactions where money leaves the business.
-- Assets: An asset is anything that has current or future economic value to a business.
-- Liabilities: A liability is something that the business owes to someone else.
-- Equity: Equity in accounting is the remaining value of an owner’s interest in a company after subtracting all liabilities from total assets.
Knowing the difference between revenues and expenses is pretty clear without much more background information and is critical for business functions. But knowing the difference between an asset and a liability is a little more complex, and that knowledge can go a long way.
The one area that most people typically don’t know much about, or even where to find it, would be their equity in a business. Equity is the amount the owner or shareholders would get back if the business paid off all of its debt and liquidated all of its assets.
If you need more guidance on bookkeeping in general, these five subcategories or just need assistance in getting your financial information under control, make an appointment with your Wyoming SBDC Network adviser. All of our advising staff have significant financial expertise and training resources available to share with you at any time.
The Wyoming SBDC Network offers no-cost advising and technical assistance to help Wyoming entrepreneurs think about, launch, grow, reinvent or exit their business. In 2022, the Wyoming SBDC Network helped Wyoming entrepreneurs start 68 new businesses; support 2,411 jobs; and bring a capital impact of $5.3 million to the state. The Wyoming SBDC Network is hosted by UW with state funds from the Wyoming Business Council and funded, in part, through a cooperative agreement with the U.S. Small Business Administration.
To ask a question, call 1-800-348-5194, email firstname.lastname@example.org, or write Dept. 3922, 1000 E. University Ave., Laramie, WY 82071-3922.