Business Finance

Business Finance Mini Course - The Basics

This free business finance basics mini-course designed to give new and existing business owners a manual they can use to understand and set up all of the parts of a financially successful business.

So when I was writing this course I made it not only so that new business owners could understand the basics of business finance, but also that existing business owners could audit their own knowledge.

This course is meant to be a base upon which you can build a solid foundation and have an understanding of what owning a financially successful business looks like.

Throughout the course I will give you small tasks to complete as you follow along. Taking 5-10min to complete each task will allow you to retain the information better. When implemented correctly, this is life changing information.

If you are new, this information will help you build a solid foundation for financial success. If you already have a business, this information will help you make it even better. By the time we work together. It’ll be all about growth!


  • Part 1: Introduction (Above)
  • Part 2: Setting The Frame
  • Part 3: Legal Business Types
  • Part 4: Tax Business Types
  • Part 5: EINs And Tax Years
  • Part 6: Penalties
  • Part 7: Accounting Methods & Information Returns
  • Part 8: Balance Sheets & Income Statements
  • Part 9: Improving On A Solid Foundation
  • Part 10: Creating A Road Map To Wealth


On the topic of making money... when big time investment bankers decide to make money, they start to look for the right investment vehicle.

But what does it mean to have an investment vehicle?

I could tell you all of the details, and trust me, I would love to. But right now all of that would sound like some blah blah blah nonsense.

Instead I present to you: A lemonade stand

When you decide to start a lemonade stand, that means you decide to invest in lemons, water, sugar, a stand, and a sign. You send money out with hopes of getting more money back in.

The lemonade stand is the vehicle you are using to help you make more money: this is an investment vehicle.

If the investment part is confusing you, just focus on the vehicle part. Your business is a vehicle that is going to take you to Your Big Bank (YBB).

Next we will build on the idea of a vehicle to help you understand business finances.

Welcome to YBB.


Skkkkrrrrrtttt….your lemonade stand has made you Millions!

You just bought a new Lamborghini. You’re at a red light on the Amalfi Coast of Italy, you drop the top and cruise as you let the breeze go through your hair. You’re on the way to a luxury restaurant that one of your friends recommended to you.

But focus on the Lambo. When you bought that vehicle you knew exactly where you were going.

You knew exactly

  • Which brand you wanted to purchase
  • What size vehicle you wanted
  • How you wanted the car to feel
  • How much you were expecting to pay for gas
  • How far you wanted to drive it
  • How often you would have to take it for a tune up
  • AND what kinds of speeding tickets and other penalties you might face if you didn't operate the vehicle according to the law

You knew everything about how you wanted that vehicle to run and you were fully aware of your responsibilities, the cost to replace parts, all of it. EVEN the fancy restaurant you were going to.

This is the FUTURE you.

Can you say the same about you now?

When was the last time you went to purchase a new car?

Did you know everything you needed to know to purchase that vehicle?

Did you do any research? Did you check the specs?

Tell me? What does that Process Look Like for you?
Well...what if I told you that in many ways...purchasing a car is like setting up a business…


When you decide to go purchase a vehicle, the first thing that you probably do is...choose the make (brand) of your car. You might choose between one of the following popular options:

  • Honda
  • Toyota
  • Ford
  • Chevrolet
  • Etc

Just like choosing a brand of car, you can also choose the type of business you want to set up:

  • For Individuals
  • DBA
  • LLC
  • For Groups
  • LLC
  • Partnerships
  • Limited Liability Partnerships
  • For Corporations
  • Corporation
  • B Corporation
  • Public Benefit Corporation
  • Other Business Types
  • Trusts

In essence, choosing the “make” of your car means that you’re choosing the “brand” of your vehicle,  which comes with all of the history and trust that you have in that “Brand.” Likewise when you choose a business type, you are choosing all of the history that comes with it...the judicial history…

You see...a business is meant to provide legal protection to its business owner(s); to create a shield that protects them against negative legal action. The strength of the shield is determined by previous case rulings called “precedents” and your state’s business laws (officially known as UCC codes).

To sum up:

A Car Brand = Business Type

Trust in the Car Brand = Trust in the Legal Precedents + State Laws for that Business Type

TASK #1 (Legal Business Types)

Now if you have a business, I want you to take a few steps and keep them in mind:

  1. Identify the type of business you have.
  2. Write down the reason why you chose to use that business type.

If you haven’t officially filed your business yet:

  1. Do some research on the business types listed above.
  2. Choose a business type.
  3. Write down the reason why you chose that type.

Keep it handy folks! We’re going to refer back to this in future installments!

Realize that once you decide to set up an official business, you will also need to pay taxes for that business come year end.After all, the only two things guaranteed in life are death and taxes…


Today we are continuing with the car buying experience. Previously we chose a car type, and by extension a business type. Following that same logic, the next thing you would do when choosing a car is to chose the car’s size:  

  • Compact SUV (Ex: Toyota Corolla)
  • Mid Size SUV (Ex: Toyota Camry)
  • Full Size SUV (Ex: Ford Explorer)
  • Minivan (Honda Sienna)
  • Pickup Truck (Ex: Ford F150)

Choosing a car size is just like choosing a business tax type

  • Sole Proprietorship
  • Partnership
  • C-Corporation
  • S-Corporation
  • Trust

Each one comes with its own advantages and disadvantages.

If you notice, larger cars will typically consume more gas/mile and will have higher maintenance costs.
Ex: A Ford F150 will consume more Gas/Mile than a Toyota Prius…

With businesses, C-corporations will typically cost you more in taxes than S-corporations. IF you don’t believe me just google “double taxation.”

But I want you all to keep in mind that just like a truck can haul big items with relatively little strain, the same applies to business tax types.

Make sure you choose the appropriate one for the size of your organization.

Bigger organizations are usually more well off if they are set up as C-Corporations and smaller ones are usually better off if set up as S-Corporations.

To sum up:

A Car Size = Business Tax Type

Smaller is cheaper but not always better, context matters.

TASK #2 (Business Tax Types)

If you have a business, I want you to go look at your previous year’s tax returns, what business tax type did you or your accountant use? If you don’t have a business, ask a friend, or ask a relative that same question. What was the reason for using that tax type?

Once you are settled with the business tax type you want, you can can you to the and apply for an EIN. Keep in mind you will have to choose a tax year as well. I will explain the exact process later on...

But what does it mean to get an EIN and choose a Tax Year?


I want to take a slight deviation from our little example of car shopping here.

Partly because I don’t want to exhaust you, but also because this next part of the explanation doesn’t fit in 100% with the example of purchasing a car…

When you purchase a vehicle, it comes with a VIN (Vehicle Identification Number) This number is assigned to the vehicle after it is manufactured and before you buy it.

In the same way, during the business formation process, your business will acquire an EIN (Employer Identification Number). In some ways this is just like a VIN because it stays with your business for the duration of your ownership. Sometimes it will stay the same after the business is sold. And other times it might change…

Basically the IRS wants to track your business the same way the Department of Motor Vehicles wants to track the purchase and sale of vehicles.

Each character in a VIN has specific meanings.

Each number in an EIN has specific meanings.

<insert diagram>

This is why each number is uniquely assigned to your vehicle/business.

When you start your business you will have to choose a tax year as well. This is the same thing as choosing when you want the year to start for your business.

You can think of it like this. The Chinese new year starts in February but the Gregorian (regular) New Year starts in January.

Particular industries and tax strategies are the most popular reasons why you would choose a “non-standard” tax year.

TASK #3 (EINs & Tax Years)

If you have a business; do you know where your EIN Letter is (form SS-4)?

If you are a new business, please visit the website to get an EIN. Reminder that we will cover this exact process later...hint i told you this twice for a reason ;)

How would changing the start of your year from January to June impact you?

Just something to think about...

Remember business is a game. And every game has rules. Make sure you know what happens when you break the you can break the rules carefully...we’ll be talking about them next.


Alright today we are back in the dealership, you’ve decided what brand of car you want, you’ve decided which size you want, and the dealer has let you test drive a few cars with a few different options…

But right as you were about to make the decision to buy the car, your annoying Debbie Downer of a friend starts reminding you of all the things that could go wrong after you buy the vehicle. And they’re so persistent that they keep telling you about speeding tickets, and speed cameras, and potholes, and how often you have to change your oil...blah blah blah.

And so just like owning a vehicle, if you operate a business incorrectly there will be penalties(a few examples):

  1. Late Tax Payment Penalties - Must pay at least 90% of estimates taxes by the tax filing date.
  2. Late Tax Filing Penalty - Must file taxes by filing dates, typically March 15th or April 15th depending on your business type.
  3. Incorrect Estimated Tax Paid Penalties - Must pay at least 90% of estimated taxes by the tax filing date.
  4. Affordable Care Act Penalty - Must have health insurance if you can “afford it”
  5. Books and Record-keeping Requirement - You have to keep accurate books and records for at least your 3 most recent years in business. This rule is arguably the most important rule. Can you imagine why?It's not  exactly what you think...i’ll tell you why later…
Entrepreneurial Finance Toolkit Vol. 1

Entrepreneurial Finance Toolkit Vol. 1



Most of these penalties usually incur interest or little fees that add up over time to large amounts so be mindful of meeting all required deadlines.

No worries though because at worst you’ll only have to deal with the small and easy penalties. (YOU HAVE ME!)

The moral here is to operate your vehicle and your business safely!

Stay inside of the lines of the road and drive at the speed limit...if you must break the rules do so carefully!

Keep going and you’ll get to that (financial) destination we all want to get to.Is it financial freedom?

Or is it something else?

There is no task today.


I’m not sure if you have noticed but cars have the options to come with different dashboards(and car computers), for simplicity's sake, we are going to call your dashboard the accounting method you use; It keeps track of your car's metrics and spits out reports to your mechanic

  • Speed
  • Fuel
  • Engine Heat
  • Oil
  • Etc

In a business your accounting method will determine how you keeps track of

  • Revenue
  • Cost of Goods Sold
  • Expenses
  • Profits
  • Etc

The reports that contain this information will be covered in the next section...

For now you should know that the IRS wants Inspection reports the same way the DMV does. These “inspection reports” are more commonly known as

  • 1099s
  • W2
  • 1040s
  • Tax Returns
  • Etc

This is the whole point of filing taxes in the first place…

However you should keep in mind that the IRS doesn’t want ALL the metrics on your business. So make sure you familiarize yourself with the information returns the IRS wants from you know what information to keep track of during the course of business.

TASK #4 (Accounting Methods and Information Returns)

If you have a business, go take a look at your tax returns. Write down a list of the forms that you filed last year.

In the next sections we’re going to cover the two main business reports that you NEED to know. Quite frankly if you don’t know how to do anything else financially in your business...learn how to read these two reports…


Continuing with the idea of tracking your car’s mentioned before your car’s dashboard will display your car's metrics:

  • Speed
  • Fuel
  • Engine
  • Heat
  • Oil
  • Etc

Over time your car’s computer will record the stats and spit out a report that tells you your car’s metrics:

  • Fuel Efficiency
  • Brake Efficiency
  • Acceleration
  • The report

The report that contains all of this information is a diagnostic report. Mechanics will use it to check on your car's health.

Likewise in your business your bookkeeper will keep track of your

  • Revenue
  • Cost of Goods Sold
  • Expenses
  • Profits
  • etc

The report that they will give you with this information on it is called your income statement.

A savvy CFO (Chief Financial Officer) for your business can use an income statement report to help you diagnose the financial health of your business and advise you on how to grow it.

BUT what if you wanted to dive deeper than that?What if you wanted to modify your vehicle?

Then you would need to start changing parts in your vehicle:

  • The Body
  • Engine
  • Transmission
  • Drivetrain
  • etc

You would also need to know the cost of each part to be able to estimate how much your car is worth.The report that shows you the “cost based” value of  your business is called the balance sheet.

During the course of business you will get valuable property (assets) and may incur some debts (liabilities)Also your bookkeeper will keep track of your assets and liabilities and report them to you on the Balance sheet.

Again a savvy CFO (Chief Financial Officer) for your business becomes indispensable. They act a your financial

  • Manager
  • Strategist
  • Synergist
  • AND Driver of better finances in your business

When was the last time you looked at your business’ financial statements?

Does your business have a CFO?

Were they at your side?

Have you been incorporating them in your business strategy sessions? All things to think about…


So we started our story earlier at the dealership...and we talked about how you all different options for

  • Car Brands (Legal Business Types)
  • Car Sizes (Business Tax types)
  • Car years and VIN numbers (EINs and Tax Years)
  • Car Dashboards and Inspection Reports (Acct Methods + Info Returns)
  • Car Specs/Performance and Part Price List (Income Statement and Balance Sheets)
  • And even how you might be impacted by Car tickets and fines (Business Fines & Penalties)

So now you should understand *almost* all the basics needed for a financially successful business but what does this look like. Before we talk about the final few, let’s go over a real life example:

John and 4 friends decide they want to start a real estate business. They plan on purchasing houses, fixing them up, and renting them out to tenants.

They want as much legal liability protection as possible because they will be dealing with tenants so they decide to set up their business as a C-Corp; to avoid the double taxation that typically comes with C-Corps, they decide to get taxed as an S-Corp instead of a C-Corp. (This is done by filling out a form after you get your EIN) Since they didn’t have any special considerations they ended their tax year in December.

To keep things simple they decide that they would do all their transactions in cash and use the cash method of accounting for as long as possible. John was going to act as the CFO of the business initially and do all the bookkeeping and tax filings including the 1099 to contractors and the K1 to the partners. Since this is an S-Corp he marked on his calendar to file the taxes by March 15th every year so they could keep their beneficial S-Corp status and avoid all possible late filing penalties...They expected their business to generate $100,000 per year with 5 Homes worth $50,000 each by the end of year one. As mentioned before they are not going to use any liabilities.

This example is just one of the many business configurations you can come up with using the information above. OF course you want to choose the best configuration for YOUR business type. If you need help feel free to book a consultation.

Now that you have a solid foundation on the basics I’d like to mention that just like with a car, there are a few more things that you will need when you set up a business:

  • Insurance: If you have employees then you have to get employer liability insurance.  
  • Intellectual Property (think of this like your unique decorations and upgrades to your car)
  • Trademarks
  • Copyrights
  • Patents
  • Trade Secrets

I won't cover these topics here but if you want more information feel free to contact me at


I hope that by now  you can see your business is a vehicle, an investment vehicle.

Just like you can choose whatever car that you want and customize it, you can choose & customize the business that you want.

And invest in improving that vehicle to make it faster, more fuel efficient, accelerate faster, etc

So once you have your vehicle what’s next?

Once you get in, feel the leather seats; listen to your favorite song on the sound system; eat your favorite snack in the driver's seat even though you just finished telling your friends they can’t eat in your car...

You have a new vehicle and it’s going to take you places right?

Well my job is to help guide you and your vehicle to the only destination you could have wanted to go to since you’re on this website.


Sign up for our email course and learn how you can use the basics of bookkeeping and accounting as your GPS Roadmap to Your Big Bank plus a chance to get a free Business Roadmap Session with me where we will discuss how you can build YourBigBank.

According to a 2019 article that was posted on business insider, 51% of 233 wealthy individuals interviewed were Dreamer-Entrepreneurs. Twenty-seven percent of these Dreamer-Entrepreneurs failed at least once in business. I have worked with business owners since 2010. First as an accountant, then as an auditor, then as a credit consultant, and more recently as a Virtual CFO. In all my time working with small business owners I have noticed that business owners of all experience levels are usually missing a strong and solid financial foundation.

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