There are many ways to raise capital, for example, starting up a business requires capital or have a business plan or launching a product into the market all requires capital. The best way to raise capital is to go to the bank’s and request a business loan or a personal loan depending upon how much you wish to borrow.
The factors that you will need to take in to consideration whilst taking out a loan whether it’s a business loan or a personal loan is that you will first need to convince the bank why you need this money, what your business plan will be and how you will aim to repay this amount you wish to borrow, therefore having a business plan is key in making sure you know exactly what you are or will be expecting. Other ways can be to raise capital through family and friends which is where most will go in terms of raising money for the short term which they may payoff once they receive profits.
In terms of bank borrowing, it is important to note that you will be charged interest and will have to pay the repayment amount, therefore it is important to understand with the banks what the overall cost may amount to whether you are paying monthly and how long the duration is for. Other methods of raising capital could be through crowd funding through the internet. It is important to always look at what method would suit you best and what you aim to do.
Taxation plays a huge part in any business in terms of making sure that you pay the right amount of tax on your profits and comply with the law as well as knowing what the rates of taxation are.
Many of the companies appoint an accountant to deal with their tax issues and accounts, in some case individuals’ sole trader may do their own accounts, those with the knowledge can also do their own accounts and submit to the revenue office at the year-end. Tax is calculated on the bases of a certain percentage rate that every year could change depending upon the rates agreed. Accountants are the experts in this subject area which many sole trader or entrepreneurs can get advice form or appoint for the tax purposes for their business. There are tax liabilities for businesses which can reduce the business tax that is subject to being paid depending upon the framework of allowable and dis-allowable expenses.
Agency theory helps to explain why directors of companies take part in creative accounting practices to try to report artificially high profits for their companies trigger bonus payment to themselves. Directors would take a more detached view of the financial results of their companies if their pay was totally independent of the reported results.