Click any book to explore a topic. More guides are added each month.
Federal & State Tax Guide
Most small businesses are pass-through entities: profits and losses flow directly to your personal tax return rather than being taxed at the corporate level. How you file depends on your business structure:
If you own a sole proprietorship, partnership, or LLC taxed as a disregarded entity, your net business income is subject to self-employment (SE) tax in addition to income tax:
Example: $100,000 net profit means ~$14,130 in SE tax. That's before federal income tax, which is why quarterly estimates matter.
If you expect to owe $1,000 or more in federal taxes after withholding, you are required to pay estimated taxes quarterly using Form 1040-ES. Missing payments triggers underpayment penalties.
Safe Harbor Rule: Pay 100% of last year's total tax liability (110% if AGI exceeded $150,000) and you avoid underpayment penalties even if you owe more this year.
Your Tributum advisor tracks your quarterly estimated tax liability in real time based on your actual income and expenses, so you always know what to set aside and when. No more scrambling in April.
Your Business Scorecard · P&L Explained
The income statement (also called a Profit & Loss statement, or P&L) shows whether your business made or lost money over a specific period of time. Think of it as a video of your finances from a start date to an end date.
The key question it answers: "Did my business earn more than it spent?"
Revenue does not equal profit. You can generate $500,000 in sales and still lose money if your expenses are $510,000. The income statement makes this visible so you can act on it before it becomes a crisis.
Watch your gross margin closely. If your gross margin is shrinking (meaning COGS is rising faster than revenue), you are making less on every sale than before. This often signals pricing problems, supplier cost increases, or operational inefficiency.
Tributum auto-generates your income statement from your connected systems. On the free tier, you can manually enter each line to build this yourself. The dashboard calculates gross profit, net income, and margins in real time as you type.
Your Cash Heartbeat · Cash In vs. Cash Out
The cash flow statement tracks every dollar of real cash moving in and out of your business over a period. Unlike the income statement (which can record revenue you haven't actually been paid for yet), the cash flow statement only counts cash that physically hit your bank account or left it.
The key question it answers: "Do we actually have money right now, and where did it go?"
This is one of the most important concepts in small business finance, and one of the most misunderstood.
Imagine you complete a $50,000 project in December but the client pays in February. On your income statement, you show $50,000 of revenue in December. But your cash flow statement shows $0 cash received in December; if rent, payroll, and suppliers are due that month, you may be facing a cash crisis despite being technically profitable.
This gap between recorded revenue and actual cash received is why profitable businesses go bankrupt. Monitoring your cash flow statement (not just your P&L) is the difference between surviving and not.
Add the three sections together and you get your net change in cash for the period. Add this to your starting cash balance to get your ending cash balance, which should match your bank statement exactly.
What healthy looks like: Strong, consistently positive operating cash flow. Investing outflows are acceptable and even expected if the business is growing. Financing inflows should be decreasing over time as the business funds itself.
| Question | Income Statement | Cash Flow Statement |
|---|---|---|
| Tracks | Revenue & expenses | Actual cash movement |
| Timing | When earned/incurred | When cash changes hands |
| Answers | "Are we profitable?" | "Do we have money?" |
| Key risk | Missing cash crisis | Missing profitability trend |
Connect your bank account via Plaid and Tributum will build your cash flow statement automatically, giving you real-time visibility into where your cash is coming from and going. You'll never be surprised by a low balance again.
Your Business Snapshot · Assets · Liabilities · Equity
The balance sheet is a snapshot of your business's financial position at one specific moment in time, like a photograph. While the income statement covers a period ("this month's profit"), the balance sheet says "here is exactly where we stand right now."
The key question it answers: "What does the business own, what does it owe, and what's left for the owner?"
Assets = Liabilities + Equity
This equation always balances, hence the name "balance sheet." If you take out a $30,000 loan (a new liability), your assets (cash) increase by $30,000. If you buy equipment for $30,000 cash, one asset goes down and another goes up. The two sides always match.
Your balance sheet tells the story of your business's financial health at a single glance. Tributum generates this automatically when your accounting system is connected, giving you an up-to-date snapshot every time you open your dashboard. A growing equity number quarter over quarter is one of the most meaningful milestones you can track.
LLC · S-Corp · C-Corp & More
The default structure when you operate as yourself. No formal registration required beyond a DBA if using a name other than your own.
The most popular structure for small businesses. An LLC separates your personal assets from business liabilities while keeping taxes simple.
An S-Corp is a corporation that elects to be taxed as a pass-through entity. The primary advantage is reducing self-employment tax once your business is profitable.
Example: $150,000 net profit. As an LLC: ~$21,200 SE tax. As an S-Corp with $70,000 salary: ~$9,900 payroll tax, a potential savings of ~$11,000/year (minus ~$1,500–$3,000 in added accounting costs).
A C-Corp is a fully separate legal and tax entity. It files its own return and pays corporate income tax before any distributions to owners.
| Structure | Liability | Tax Filing | SE Tax | Complexity |
|---|---|---|---|---|
| Sole Prop | Unlimited | Schedule C | All profit | Low |
| LLC | Limited | Sch C or 1065 | All profit | Low |
| S-Corp | Limited | Form 1120-S | Salary only | Medium |
| C-Corp | Limited | Form 1120 | N/A | High |
The right structure depends on your current profitability, growth plans, and risk tolerance. Your Tributum advisor can model the after-tax impact of different structures against your actual numbers.
Loans · Equity · Grants · Alternative Capital
Bootstrapping means building your business using personal savings, revenue from early customers, and disciplined reinvestment, with no outside capital required.
When it works best: Service businesses, consulting, agencies, and any model where revenue comes in quickly and capital requirements are low.
The SBA guarantees loans made by approved lenders, reducing lender risk so small businesses get better terms than they otherwise would.
Typical requirements: 2+ years in business, credit score 650+, demonstrated ability to repay, collateral, and a personal guarantee.
Online lenders offer faster approvals and looser requirements, though at significant cost.
Caution: Always calculate the true APR. A factor rate of 1.3 on a 6-month advance equates to roughly 100% APR. Use only when the return on capital clearly exceeds the cost.
Where to start: Grants.gov for federal programs; your state's SBDC network for local opportunities.
| Source | Amount | Equity? | Repayment | Best For |
|---|---|---|---|---|
| Bootstrap | Unlimited | No | None | Early stage, services |
| SBA Loan | Up to $5M | No | Fixed monthly | Established, profitable |
| Online Lender | $5k–$500k | No | Daily/weekly | Fast capital, high cost |
| Angel | $25k–$2M | Yes | Exit event | Scalable startups |
| VC | $500k–$50M+ | Yes | Exit event | High-growth tech |
| Grants | $5k–$1.8M | No | None | R&D, nonprofits |
| RBF | $50k–$3M | No | % of revenue | Recurring revenue |
| Crowdfunding | $10k–$5M | Either | Varies | Consumer products |
The right capital source depends on your revenue model, growth rate, and how much ownership you want to retain. Your Tributum advisor can model the real cost of each option against your cash flow projections, so the decision is based on your numbers, not a pitch.