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Accounting

CLS 5. Accounting. Start-Up Cost. Money Needed to Start a Business Examples Equipment and supplies Furniture and fixtures Vehicles Remodeling Legal and accounting fees. Equity vs. Debt financing . Equity Capital – cash is raised in exchange for an ownership stake in the business.

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Accounting

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  1. CLS 5 Accounting

  2. Start-Up Cost • Money Needed to Start a Business • Examples • Equipment and supplies • Furniture and fixtures • Vehicles • Remodeling • Legal and accounting fees

  3. Equity vs. Debt financing • Equity Capital – cash is raised in exchange for an ownership stake in the business. • Personal Savings • Friends and family • Private investor • Partners • Venture Capitalists • Debt Capital – money raised by taking loans • Banks • Trade Grant • Venture Capital – source of equity financing for small businesses with exceptional growth potential and experienced senior management • Less than 1 percent of all ventures

  4. Equity Capital • Also known as risk capital. • High risk, high reward.

  5. Types of Equity Capital • Personal Saving – 2/3 of entrepreneurs use only their own money to start the business • Friends and family – rich uncle • Partner – find a partner with similar goals • Private investor(Angel) – nonprofessional financing source. • Venture Capitalist – Experienced professionals.

  6. Types of Debit Financing • Operating Capital – the money a business uses to support its operations in the short term • Banks – the primary source of operating capital • Trade Capital - businesses grant these to other businesses for purchase of goods and services.

  7. Financing • With a partner, come up some pros and cons for each type of financing.

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