What do all those accounting terms mean? I have to tell ya; I’ve been using Quickbooks for my business going on…oh, I’d say 10+ years. But I still have to educate myself when it comes to those obscure accounting terms. Now I am NOT a CPA–this is just for reference. I knew that if I could put it in terms that even I could understand that it would help me. Always consults with your Accountant before taking anybodys financial advice.

Liabilities AKA debt–not necessarily a bad thing–but it can hurt your business if your debt far outweighs your assets

Owners Equity–the interest that the owner has in a company AFTER liabilities are paid

Assets are the resources that business owners have that in the future are expect to generate income. Do not discount non-physical assets; such as, trademarks, brands, and copyrights

It’s always a good idea to analyze your debt (liabilities) to income ratio. Are you spending more than you make? Then you must cut expenses. It sounds like a simple plan; but most of us are in debt before we even start to think about operating a business–online or otherwise.

The important message here is to get educated or invest in that meeting with a professional account or CPA before making any major business decisions.

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