You are looking ahead to starting a business after graduation. A colleague recommended that the two of you begin developing a plan now to determine how funds will be obtained to launch the business and support operations. You both agree that the business will require at least $50,000 of start-up capital and one employee besides yourselves. Include the following information in your plan:
• Describe the type of banking and loan arrangements you would use to collect the funds to launch the business, and explain how these accounts would be monitored to ensure accuracy and sufficiency of funds. Show an example of how a loan might be constructed to obtain the start-up capital, including computations of payments and interest.
• Discuss the types of taxes you will need to consider collecting, paying, or remitting relative to your business, and explain how these are computed.
• Explain how you will use pricing, commissions, discounts, markups, or markdowns strategically to help generate interest in your business product or service offering.
o Discuss how these will affect income and the cash available to the business.
• Assuming that inventory and computers are among the first asset purchases planned, explain how these will be acquired.
o Show computations of how costs will be recovered.
• Discuss how technology and the Internet will be used for banking and financial aspects of the start-up and operation of your business.
• Discuss the issues and risks associated with processing financial transactions and records on the Internet, and explain how you plan to address them.
In compliance with BrainMass rules this is not a hand in ready business plan but is only guidance.
Banking and Loan arrangements: I will obtain a micro loan from a local bank for start-up capital. My business will make molded plastic toys and the startup capital required will be $50,000. This loan account will be monitored by examining the monthly statement from the bank and comparing it with the cash account in my firm. If there are any discrepancies, a bank reconciliation statement will be prepared. The construction of the loan will be as follows: The total loan taken will be $50,000, and the annual interest rate will be 18%. The term of the loan will be 3 years. The monthly payment for every month will be $1,807.62. The value of the total payments made will be $65,074.31 and the total interest paid by my firm will be $15,074.31. At the end of one year the principal outstanding will be $36,207 and at the end of the second year the principal outstanding will be $19,717.
Taxes to be paid: The business will have to pay income tax, estimated tax, self-employment taxes, employment taxes, and excise duty. Further, if the state has an income tax, the procedure for paying state income tax also will be done.The computations for the payments of these taxes is that estimated tax payments for the whole year is equal to 100% of what has been owed in the ...
A business plan is explained in a structured manner in this response. The answer includes references used.