Banking and Loan Arrangements (Essay Sample)

Business Plan
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Abstract
This paper is written to explore banking services, loan arrangements and monitoring the bank accounts to ensure seamlessly running of the business. The paper considers what kind of the banking services would suit the company. Taxes that the business will consider paying, collect, and how they are computed follow suit. Pricing strategy follows suit, and the different pricing strategies affect income and cash flow of the business. The paper continues to show how the first assets are acquired, and costs are recovered. Internet banking will be an integral part of the enterprise these are clearly proved. Finally, an analysis of risks involved in making online transactions is made and how the business shall tackle the challenges.
Business Plan
Banking and loan arrangements are terms left for the rich and companies in the recent past. However, modernization, competition, and legislation have made these services readily available to people from all occupations. Today, there are more banking services and accounts to choose from, and loan arrangements to choose. The new business should choose a commercial bank for their banking services. These are because of their reliability and availability across different cities and rural dwellings. Commercial banks have several products on offer and investment opportunities for the business. A Check bank account is the best banking option available to suit a new business enterprise. The account comes with a wide variety of features to choose from; checking and managing cash flow, managing payments, online banking, mobile, and tablet banking, and account alerts on deposits and withdraws. Moreover, bank overdrafts are available on these accounts at affordable interest rates, Lawlor (1993).
A loan arrangement is an agreement where lenders set conditions under which they will make funds available to a borrower. The enterprise should consider the best loan arrangements considering the convenience of payment, and interest rate. Moreover, bank overdrafts which provide short term funds to a business. Long-term loans are better considering they have the longer time of payment and low-interest rate, (Norris, 2000). Choosing a suitable attorney to advice and explain some legal terms is an option the new enterprise should consider. Constructing a projected cash flow model is one key step that the business owners should consider venturing. This will determine the amount they are eligible to acquire and the time of payment. The business should construct how to get a loan by having a clear projected cash flow and possible collateral. These prove that the business is not a possible risk to the financial institution. Making payments for capital is done after deducting all running expenses of the business from the income generated from the business. Part of the remaining margin is allocated to payment of the outsourced capital. However, interest on the outsourced capital is computed as an expense when preparing the statement of comprehensive income.
Tax is what a business or individuals owe a government and failure of payment is an economic crime. Sales tax is not inevitable to the new business; all sales are considered tax legible. However, there are products that enjoy tax relieve from the government. Sales tax is charged on every item or service sold, and it is covered in the sale. It is considered a cost of sale in the business. Sales tax is imposed on the sellers, and that is why it is considered a sales expense. It applies to the amount a seller receives from a seller and not the seller's margin or profit, Matten et al's (2008). Moreover, the business should be aware of other statutory deductions payable to the state.
Correct pricing and discounting is the right avenue towards profitability in any business. An ideal price and discount is one that is acceptable sellers and purchasers; it is a point of equilibrium that is hypothetical rather than practical. These are because buyers will seek for lower prices at all times and sellers for higher prices. The conflicting interest makes it hard for the ideal price to be achieved. However, discounts are meant to attract more clients to purchasing a product or service. The business should come up with a pricing model that is conscious of the market price, price elasticity, and product or service life cycle. Markdowns are the limit below which a product or service can be priced. All these affect cash flow into the business and funds available for expansion and other uses. Sales form the largest part of income in any company, formulating the right sales policies and models on discounts, prices, markdowns, and markups are vital for the success of the business.
Computers will be among the first assets of the business. Thus, they will purchase from the capital funds of the business. The inventory will account for current assets, they will be considered in determining the net value of the business. Both computers and inventory are acquired and recorded in the books of accounts as assets; they will be purchased from the startup capital the business shall acquire. The following model computes inventory. The number of units sold, and price per unit are considered in the model.
Beginning Inventory