Round Table
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Finance
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How do we organise the business and finance? Firstly,
it is beneficial to separate your home based internet business
finance from your personal finances. Separation will allow a clearer
view of where money is being spent and where it is being earned. It is
crucial to know how the business is performing. Development plans and
tax calculation will be greatly assisted.
Here is a suggestion which allows you to make purchases, collect commission,
accept payment and monitor expenditure. Open the following types of
accounts:
- Bank account
- Credit card account
- Savings account
- PayPal account
The flow chart illustrates the flow of funds between accounts. The dashed line box represents the home based internet business. Once the accounts in the dashed box are open move your starting
capital into the bank account. This bank account will be like a
crossroads providing connections to most of the other elements. Ensure
that you have internet access to this account.
The credit card account is used for making online purchases with
various suppliers like the web host provider and e-products resellers.
Use the credit card wisely. The objective is to make money not run up a
large credit card bill and get burdened with interest each month. Exercise
caution. The credit card is also used to load up the PayPal account with
an initial sum of money. An online credit card account is advantageous.
You can use PayPal to either buy goods or accept payment for goods.
Depending on the type of PayPal account you can even accept payment by
credit card. Commission from opportunities can be paid into PayPal of
your bank account.
Starting capital will, depending on the scale of
your business, have originated from personal savings or a loan. Either
way, it needs to be paid back. Hence, the arrow pointing back toward the
"starting capital" box. Money kept in a savings account will
earn a higher interest rate than the bank account. Move money to here as
the bank account builds. Use it for longer term business development and
preparation for tax payment. As your business develops and begins to be
profitable you can draw funds from the bank account into your own
personal bank account. A reward for your efforts.
You may not be familiar with PayPal so a brief overview
will be of assistance.
PayPal is a service by which online payments can be made or accepted. To
participate you open an account with PayPal. There are three types:
- Personal Account
- Premier Account
- Business Account
With a Personal Account you can send money to or receive money from
anyone with an email address. No credit cards are allowed. There is no
charge made for transactions.
The Premier Account is a little
different. You can send money, i.e. make purchases, for free. There are,
however, fees for receiving money. Receipt of credit card payment
facilities are available for the seller. Very useful!
The Business
Account has the benefits of the Premier Account. The added benefit is
that one can do business under a corporate or group name and multiple
logins are available.
Payments can be received from people in
other countries. Additional fees are charged for this service.
When
you wish to transfer funds from you PayPal account to your bank
account there is no charge for sums above a minimum amount. There is a small
charge for sums of less than the minimum.
Next
item in the plan is to build a Web Site.
