You finally made the big decision to bust out all of your savings and start your own business. With the wide set of options in front of you, you do not know which one to take. Now you ask yourself with questions that seems to have no definite answers. What are your current resources? What are your expertise that you can use to help start a business? Which one is more profitable? There are certainly a lot of things to consider so you can have a fail proof plan. In this kind of situations, it’s safe to start from the bottom and work your way up. Why don’t you choose first a comfortable Business Operation for you? There are Types of Business Operations and from what you choose from, may dictate the pace of how you would start your business, from capitalization, accounting method, and many more.
1. Service Business
A Service Business revolves around the idea of a company providing its customers with intangible goods. An Intangible good is something that does not have a physical nature like transportation, consultation, repair, and professional services from lawyers, doctors, financial analysts and accountants.
If you might have guessed already, service businesses doesn’t have any inventory to take into account when computing for financials. You will not have a lot of expense accounts so there are a lot more room for gray areas that you can be flexible with.
2. Merchandising Business
Merchandising Business Operations is the complete opposite of a Service Business; where you are selling tangible goods. Common businesses who sells tangible products are grocery stores, hardware supplies, and clothing. Merchandising operations however only involves purchasing goods that are ready for sale and reselling it for a certain amount of profit.
Unlike Service Business, expect to have more expense accounts. There are a lot more to manage but everything is straight forward. You need to record wages and inventory accounts.
3. Manufacturing Business
A Manufacturing Business operations concerns with manipulating resources like raw materials, labor, machine and transforming them into finished products that are ready to be sold to customers. This is the major difference of a Manufacturing Business to a Merchandising Business. A Manufacturer buys goods for the purpose of making new products and selling them, while a Merchandiser buys goods for the sole purpose of selling it right away. Popular examples of Manufacturing Businesses are big companies who makes Vehicles, Soft Drinks, and Canned Goods. But small businesses like Water refilling Stations, Bead Necklaces and Bracelets, Dried Fruits Production and Ice production are considered manufacturers also.
Manufacturing Business opens up a new world of accounting approach as you also need to consider the additional expense of your raw materials and your cost of goods sold.
What’s best for you?
On paper, you can pick any Business Operation, and that is the beauty of starting your own business. You can even choose to have a combination of the operations; it depends entirely to you and the nature of the business that you envision. This is just a friendly reminder to guide you about the things that you might encounter if you either choose to have a service, merchandising, or manufacturing business.
The crucial part of the choices that you make is having the right accounting knowledge to support your business. If you want to have a clear understanding of Accounting, send us an inquiry today so we can train you and equip you with relevant theories and engaging practice sets; no prior Accounting experience needed.
I hope you learned a thing or two after reading this write-up. If you think you want to further sharpen your accounting knowledge, TrendStatic Business Solutions can offer you technical training services with a course name “Accounting for Non-Accountants”. Inquire today! So you can learn more from the bests in the industry.
TrendStatic Corporation is also an Accounting Training Provider located in Ortigas Centre, Pasig Philippines.
We are happy to meet with you for us to assess your company’s payroll requirements.
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