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Important Terms in Business Management: Know Key Aspects

With a rise in the number of MSMEs in India, it is vital for budding entrepreneurs to learn important terms related to business functions like channel financing, accrual basis, cash basis, angel tax, etc.

  • Accrual basis: This method of accounting considers every transaction where an organisation receives or pays to be taxable.
  • Angel tax: Any business venture which has raised more funds in comparison to its estimated evaluation is liable to pay angel tax. Currently, the Indian government levies this tax at a rate of 30%.
  • Cash basis: In this method of accounting to determine if a transaction is taxable, every due payment is considered taxable.
  • Channel financing: Different short-term business loans offered by lenders to meet the working capital needs of a business come under these lines of credit.
  • Invoice financing: This financing option uses due payment invoices to avail credit for the working capital of a business venture. 
  • Supply chain management: Management of the whole production and its related logistics is supply chain management.
  • Trial balance: A financial debit-credit report which can be used to find any error.
  • Working capital: It is the difference between assets and liabilities, and it is integrally related to business finance requirements to maintain the production chain.

It is also important that entrepreneurs check the numerous norms related to GST and tax exemptions. Many government schemes are also offered to aid MSMEs which can be availed to save on the expenses in establishing or expanding a business.

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