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Milady Advanced Esthetic - Chapter 29 - Financial Business Skills
Terms in this set (31)
What should you do before opening your own business or purchasing an existing one?
Take the time to examine industry trends, analyze the competition and study economic conditions.
What do prospective business owener used to help them developed a plan of action and hopefully avoid many of the risk factors and stumbling blocks associated with business failure, including lack of sufficient capital or managerial experiance.
A business Plan
Who can provide expert advice in developing a plan of action that will virtually walk you through each process step by step.
Small business consultant, accountant or marketing specialist.
What is an Executive Summary
A business plan that should provide the reader with a complete overview of your entire strategy.
Your marketing plan should take into account all of these marketing strategies and should clearly identify all of the methods you will use to develop brand recognition and promote business.
Strategic Design and Development Plan
Your strategic plan should include a detailed account of the four P's - Product, price, promotion and place.
A solid financial magement strategy is the singlemost important factor in any business plan.
There are three primary sources for raising capital, or the amount of money you need to invest in your business -> Your savings, loans and investors. To obtain such money (load) you need to qualify as a good risk.
Private investor(s) and small business investment companies -- generally comes in the form of an exchange or return on their investments, which in this case means a portion of your income.
If you decide to borrow from a family members or friends be sure to drate a legal document that clearly defines the terms of your loan agreement.
GAAP (Generally Accepted Accounting Principles)
A financial tool and the standards procedures established by the accounting profession.
Salon and spa are now using computer software to maintain employees schedules, perform sales transactions, manage payroll and control inventory.
Anything your business owns such as facial lounges, equipment, and fixtures.
Shows the owner equity or what the owners interest is inthe assets of the company after all of the business liabilites have been deducted, this is typically referred to as the "Net Worth" of a business.
A profit and loss statement. This statement reflects your revenues or the total amount of money your business takes in the sales of products and services, reported as your "gross profit" minus the "cost of goods sold" or what it costs you to provide the products that you sell.
This information determines by the break-even analysis, or the point at which all costs are covered and your business begins to earn a profit.
What is the first rule of prevention adherence to local, state, and federal guidelines regarding disinfection and public and occupational safety?
Any risk management program.
What are the basic type of insurance ?
Property of casualty, liability, malpractice, life health, disability and workers compensation.
How do skin care business compensate service providers?
Using salary or fixed wages, such as an hourly rate, commision-based pay structures.
What is important to know about independent contractors?
Estheticians who elect to work as independent contractors should be aware that they are responsible for adhering to all laws set forth by their licensing board and any local state, federal rules and regulations that apply to small business owners in their trade.
Security Number (SSN)
If you do not have a social security number already, you can apply for one at the nearest Social Security in your alreas. You may also request an application, or SS-F Form.
What is a Employer Identification number (EIN)?
Used to identify business that maintain employees. Some bank require an EIN for any business entity including a sole propietorship that has no employee. To obtain an EIN you must fill out the form SS-4.
By law, employer must verify that their employees are eligible to work in the United States. You must use Form I-9 for this purpose.
You must fill out Form 1099 for anyone to whom you paid more thean $600 annually?
Filing Tax Returns
It is generally required to file state and federal tax returns on or before April 15 of every year unless this date falls on a Saturday, Sunday or legal holiday.
What form is used to report the amount of Federal, social Security and Medicare taxes?
What other taxes are employees responsible for paying ?
Federal Unemployment Tax
What are the benefit of paying "Self-emplyment taxes"?
Payment of this tax makes you eligible to receive retirement benefits, disability benefits, survivor benefits and hospital insurance or Medicare in much the same way as an employee would.
What form is used to report federal estimated tax payments?
When are the estimated Tax payments due?
Quarterly tax payments are due on April 15, June 15, September 15 and January 15 of each tax year.
What is "Deferred Income Tax"?
Deferred income tax is an important factor in the sales of gift certificates, which salon owners may issue for either cash value, goods or services.
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