Tax costs in a business plan depend on. Investment costs in business planning

Be careful, this material of the magazine is up-to-date on 09/26/2017

The company can develop a business plan on its own or order it to a third party. How to account for such costs? There are no official clarifications. But accounting is a creative profession.

A business plan is a necessary condition for the dynamic development of a modern company. Often, auditing or other specialized firms are involved in drawing up a business plan. This document is forward-looking and contains technical and economic characteristics of new productions, sales forecasts and financing needs.

For a definition of this term, we turn to the Federal Law of February 25, 1999 No. 39-FZ “On investment activities in the Russian Federation carried out in the form of capital investments”. Article 1 establishes: “an investment project is a justification for the economic feasibility, volume and timing of capital investments, including the necessary project documentation developed in accordance with the legislation of the Russian Federation, as well as a description of practical actions for the implementation of investments (business plan)”. It turns out that a business plan is an investment project. Its components are economic calculations and project documentation. In practice, business plans also draw up projects that are not of an investment nature. For example, a business plan is presented when applying to a bank for a loan to replenish working capital.

A business plan is also provided for obtaining the status:

a resident of a territory of advanced socio-economic development (clause 2, part 2, article 13 of the Federal Law of December 29, 2014 No. 473-FZ “On territories of advanced socio-economic development in the Russian Federation”);

a resident of the free port of Vladivostok (clause 2, part 2, article 11 of the Federal Law of July 13, 2015 No. 212-FZ “On the Free Port of Vladivostok)

a resident of a special economic zone (clause 2, part 2, article 13 of the Federal Law of July 22, 2005 No. 116-FZ “On Special Economic Zones in the Russian Federation”);

a credit institution (Clause 4, Article 14 of Federal Law No. 395-1 of 02.12.1990 “On Banks and Banking Activities”).

An investment business plan can be described as a documented business strategy. The company can draw up this governing document on its own or order its development on the basis of a civil law contract. Let's figure out how to take into account the costs of a business plan.

Asset or expense?

Let's start with accounting. Which object generates the cost of a business plan - an asset or an expense? There is no single answer to such a question. It all depends on the content of the business plan.

Suppose you have a business plan to implement an automated production line. This is the first step in creating an item of fixed assets. The costs of such a document are subject to inclusion in the initial cost of the line (clause 8 PBU 6/01).

But the business plan of a trading company to expand the sales market by attracting additional cash (circulating) assets does not form an asset. Such a business plan is of a tactical (operational) nature and the costs of acquiring or creating it are taken into account as expenses directly related to obtaining a loan or credit. They are recognized as other expenses (clauses 3, 7 PBU 15/2008).

Some companies draw up business plans for the current year (letter of the Ministry of Finance of Russia dated November 23, 2004 No. 03-03-01-04 / 1-140). Obviously, the costs of its creation of an object of non-current assets do not generate (due to the non-fulfillment of the condition of subparagraph “d”, paragraph 3 of PBU 14/2007).

Another real life example. The company plans to take part in the prestigious city competition "Best Entrepreneur" and intends to submit a business plan as part of the competition documentation. Apparently, the costs of such a business plan have an advertising focus.

Let's focus on long-term business plans related to the newly created business as a whole. This document is of a strategic nature. It will be used by the company for a number of years. Is it possible to account for the costs of such a business plan as an intangible asset (IA) or to attribute them to deferred expenses (DEP)?

It follows from paragraph 65 of the Regulations on Accounting and Accounting in the Russian Federation that RBPs are recognized on account 97 of the same name “Deferred expenses” only in cases expressly provided for by regulatory legal acts on accounting. A similar position is presented in the letter of the Ministry of Finance of Russia dated November 24, 2016 No. 07-01-09 / 69311. But we will not find direct instructions on accounting for business plans as part of the RBP. Following the explanations of the said letter, we will find out whether the costs of a strategic business plan form an intangible asset.

Criteria for an intangible asset

The conditions for accepting an object for accounting as intangible assets are formulated in paragraph 3 of PBU 14/2007. And it must be admitted that the cost of a strategic business plan satisfies all of the above conditions. As a rule, such business plans are protected by the trade secret regime (Article 10 of the Federal Law of July 29, 2004 No. 98-FZ “On Trade Secrets”), which provides the company with control over the object.

Actual

Drawing up a business plan is carried out on the basis of a service agreement (due to the interconnection of the terminology of clause 8, part 7, article 1 of the Federal Law of December 30, 2008 No. 307-FZ "On Auditing" and Article 779 of the Civil Code of the Russian Federation).

Moreover, the International Financial Reporting Standard (IAS) 38 “Intangible Assets” (put into effect by order of the Ministry of Finance of Russia dated December 28, 2015 No. 217n) also allows reflecting a strategic (investment) business plan as part of intangible assets. IFRS requirements are especially relevant in connection with recent changes in PBU 1/2008 (clauses 7, 7.1), which in some cases allow the priority of international standards over federal accounting standards (PBU).

IFRS rules

We investigate whether the business plan meets the requirements for intangible assets contained in IAS 38.

Paragraph 10 of IAS 37 requires an intangible asset to simultaneously satisfy three criteria.

Identifiability

An asset satisfies the identifiability criterion if it (paragraph 12 of IAS 38):

(a) is separable, i.e. may be separated or separated from the entity and sold, transferred, licensed, leased or exchanged individually or with a related contract, whether or not the entity intends to do so;

(b) arises from contractual or other legal rights, whether such rights are transferable or separable from the organization or from other rights and obligations.

In this regard, it must be recognized that not every business plan can be isolated from the company. In some cases, business plans are closely linked to the conditions and circumstances in which the company is located and operates. Such business plans are unique, intended for a specific company, so their separability is problematic. But a business plan can be universal if its content is of interest to others. Such a business plan is severable.

Meanwhile, identifiability is not reducible to separability. Identifiability may be provided by legal rights.

The list of intellectual property objects that are granted legal protection by virtue of law is established by paragraph 1 of Article 1225 of the Civil Code of the Russian Federation. This list is closed, and business plans are not included in it. However, paragraph 1 of Article 1465 of the Civil Code of the Russian Federation allows you to classify a business plan as a secret of production (know-how). In addition, legal protection is given to any information constituting a trade secret. Its owner has the right to protect his rights in the manner prescribed by law in the event of disclosure, illegal receipt or illegal use of such information by third parties, including claiming compensation for damages caused in connection with the violation of his rights (clause 6, part 2, article 6.1 of the Law No. 98-FZ).

Resource control

An entity controls an asset if it has the right to obtain future economic benefits from the underlying resource and to restrict the access of others to those benefits. The ability of an entity to control the future economic benefits of an intangible asset usually derives from legal rights that can be enforced through the courts. Market knowledge and technical knowledge can lead to future economic benefits. If knowledge is protected by the legal obligation of employees to maintain confidentiality, then the organization controls these benefits (clauses 13, 14 of IFRS 38).

Presence of future economic benefits

Future economic benefits flowing from an intangible asset may include revenue from the sale of products or services, cost savings or other benefits arising from its use (paragraph 17 of IAS 38).

We emphasize that intangible assets are subject to recognition if and only if it is recognized as probable that the organization will receive future economic benefits associated with this object (paragraph 21 of IFRS 38).

Summarize. The strategic business plan "shows the way" to future economic benefits and is clearly designed to achieve them. Being protected by a confidentiality regime, it satisfies the IA criteria set by international standards.

If the business plan does not meet the definition of an intangible asset, the cost of acquiring it or creating it on its own is recognized as an expense when incurred (clause 10 of IFRS 38).

Accounts

The costs of a business plan that is subject to accounting as part of intangible assets are initially recorded on account 08 “Investments in non-current assets”.

If the business plan is purchased from a third party under an agreement, then the documentation is credited at a time with a record:

DEBIT 08 CREDIT 76

A business plan has been purchased (we omit VAT calculations).

If the company develops a business plan on its own, then its initial cost is formed by records:

DEBIT 08 CREDIT 70, 69, 10, 71, etc.

The direct costs of resources for the creation of a business plan are reflected.

It is advisable to provide for the need for approval of the strategic business plan by the general meeting of the company's participants in the charter of an LLC (clause 13, clause 2, article 33 of the Federal Law of February 8, 1998 No. 14-FZ "On Limited Liability Companies"). After approval, the business plan becomes a "guide to action" and capital investments go into intangible assets:

DEBIT 04 CREDIT 08

The business plan is recognized as an intangible asset.

Meanwhile, such an ending is not required. Imagine that a business plan was developed in order to participate in a competition that gives the right to state assistance (financing an investment project at the expense of the budget). If the company won the competition, then the business plan is subject to execution. Otherwise, a company that does not have its own funds to implement a business plan is forced to abandon its implementation.

Accordingly, the costs of its creation (acquisition, development) are subject to a one-time write-off as expenses. According to the author, under such circumstances, the use of account 08 is initially inappropriate. It will not be a mistake to first attribute these costs to account 97 “Deferred expenses” with their subsequent reclassification depending on the result of the tender. This accounting policy corresponds to the entries:

DEBIT 97 CREDIT 76 (70, 69, 10, 71, etc.)

Reflected the costs of creating (purchasing, developing on their own) a business plan for the competition;

DEBIT 08 CREDIT 97

The business plan is classified as a capital investment - if the tender is won

DEBIT 91-2 CREDIT 97

The costs of the business plan are written off as expenses - if the competition is lost.

After the business plan is recognized as an intangible asset, its useful life should be determined (clauses 25, 26 PBU 14/2007). There are two options here.

Option one: set the useful life equal to the period allotted for the execution of the business plan. Such a period is specified in it.

Option two: set the business plan to an indefinite useful life - if you think that it is impossible to reliably determine the useful life from it. Such a position has the right to exist based on Murphy's statistical law: “An inaccurately planned program requires three times more time than expected; carefully planned - only twice." For intangible assets with an indefinite useful life, depreciation is not charged (paragraph 23 of PBU 14/2007). The second option deserves attention in the conditions of the formation of a business, since it prevents the accumulation of losses.

Based on paragraph 27 of PBU 14/2007, the useful life of an intangible asset is subject to an annual check for the need for clarification. If there is a significant change in the length of the period during which the entity expects to use an asset, its useful life is subject to change. For intangible assets with an indefinite useful life, an entity must review annually whether there are factors indicating that the useful life of the asset cannot be reliably determined. In the event of the termination of the existence of these factors, the company determines the useful life of this intangible asset and the method of its depreciation.

On a note

Trade secret - a regime of confidentiality of information that allows its owner, under existing or possible circumstances, to increase income, avoid unjustified expenses, maintain a position in the market for goods, works, services, or obtain other commercial benefits (clause 1, article 3 of the Federal Law "On Commercial Secrets" ).

The choice of method for determining the depreciation of intangible assets is based on the calculation of the expected receipt of future economic benefits from its use of the asset. In the event that the calculation of the expected receipt of future economic benefits is not reliable, the amount of depreciation deductions for intangible assets is determined on a straight-line basis (clause 28 of PBU 14/2007). Taking into account Murphy's law for a business plan, we recommend choosing a linear method.

Finally, you need to decide which account to write off depreciation. A business plan is a management document. Therefore, the manufacturing company allocates depreciation to account 26 "General business expenses", and the trading company - to account 44 "Sales expenses":

DEBIT 26 (44) CREDIT 05

Business plan depreciation.

tax accounting

There is no doubt that the costs of business plans are made for the implementation of activities aimed at generating income. Consequently, they satisfy the general criteria for recognition of expenses established by paragraph 1 of Article 252 of the Tax Code of the Russian Federation.

A business plan is the result of intellectual activity and, as such, may be classified as depreciable property for income tax purposes. But on condition that it is long-term and its initial cost exceeds 100,000 rubles (clause 1, article 256 of the Tax Code of the Russian Federation). From paragraph 3 of Article 257 of the Tax Code of the Russian Federation, there are no obstacles to recognizing a business plan as an intangible asset. A business plan can be thought of as "possession of information regarding industrial, commercial or scientific experience". Some experts believe that a business plan is know-how.

The useful life of an intangible asset is determined in accordance with paragraph 2 of Article 258 of the Tax Code of the Russian Federation. For such intangible assets as “possession of information in relation to industrial, commercial or scientific experience” (clause 6, paragraph 3, clause 3, article 257 of the Tax Code of the Russian Federation), the useful life cannot be less than two years. If the useful life of intangible assets cannot be determined, then the depreciation rates for it are set based on the useful life of 10 years.

But the initial cost of a business plan may not exceed 100,000 rubles. Then the costs of its development can be taken into account as part of other costs associated with production and (or) sales, as the costs of managing an organization or its individual divisions (clause 18, clause 1, article 264 of the Tax Code of the Russian Federation). If such a classification does not suit you, use subparagraph 49 of paragraph 1 of Article 264 of the Tax Code of the Russian Federation.

Summarize. Due to the infinite variety of business plans, there is no single “recipe” for their accounting.

Elena Dirkova, accounting and taxation expert

As we remember, we need a business plan not only to understand the goals and ways to achieve them, but also to justify the profitability and the possibility of implementing our investment project.

When doing project calculations, you come across the concept of fixed and variable costs, or expenses.

What is it and what is their economic and practical meaning for us?

Variable costs, by definition, are costs that are not fixed. They are changing. And the change in their value is associated with the volume of output. The larger the volume, the higher the variable costs.

What cost items are included in them and how to calculate them?

All resources that are spent on the production of products can be attributed to variable costs:

• materials;
• accessories;
• employees' wages;
• electricity consumed by a running machine engine.

The cost of all the necessary resources that need to be spent to produce a certain amount of output. These are all material costs, plus the wages of workers and maintenance personnel, plus the cost of electricity, gas, water spent in the production process, plus the cost of packaging and transportation. This also includes the costs of creating stocks of materials, raw materials and components.

Variable costs need to be known per unit of output. Then we can calculate at any time the total amount of variable costs for a certain period of time.
We simply divide the estimated volume of production costs by the volume of production in physical terms. We get the variable costs of producing a unit of output.

This calculation is done for each type of product and service.

How is unit costing different from the variable cost of producing one product or service? Fixed costs are also included in the calculation.

Fixed costs are almost independent of production volumes.

These include:

• management expenses (expenses for maintaining and renting offices, postal services, travel expenses, corporate communications);
• expenses for the maintenance of production (rental of industrial premises and equipment, maintenance of machine tools, electricity, space heating);
• marketing expenses (product promotion, advertising).

Fixed costs remain unchanged until a certain point, until the volume of production becomes too large.

An important step for determining variable and fixed costs, as well as the entire financial plan, is the calculation of personnel costs, which can also be carried out at this stage.

Based on the data that we received in the organizational plan on the structure, staffing, mode of operation, as well as focusing on the data of the production program, we calculate personnel costs. We make this calculation for the entire period of the project.

It is necessary to determine the amount of remuneration for management personnel, production and other employees, as well as the total amount of expenses.

Do not forget to take into account taxes and social contributions, which will also be included in the total amount.

All data are presented in tabular form for ease of calculation.

Knowing fixed and variable costs, as well as product prices, you can calculate the break-even point. This is the level of sales that ensures the self-sufficiency of the enterprise. At the break-even point, there is an equality of the sum of all costs, fixed and variable, and income from the sale of a certain volume of products.

Analysis of the break-even level will make it possible to draw a conclusion about the sustainability of the project.

The enterprise should strive to reduce variable and fixed costs per unit of output, but this is not a direct indicator of production efficiency. It is necessary to take into account the specifics of the enterprise. High fixed costs can be in high-tech industries, and low - in underdeveloped with old equipment. This can also be observed in the analysis of variable costs.

The main goal of your firm is to maximize economic profit. And this is not only reducing costs in any way, but also using various tools to reduce production and management costs by using more productive equipment and increasing labor productivity.

The planning limit is also determined by the amount of costs spent on organizing and implementing planning.

As many of the practicing managers note, one of the most significant shortcomings of planned activities is the need for additional costs for:

research;

organizing a planning unit;

hiring additional staff.

We are talking about those scarce funds that could be used to solve other important economic problems. If we talk about non-monetary costs, planning requires another major category of costs - the cost of time - also a scarce and very limited resource.

Can the organization afford to incur such costs and hence plan? Yes, it can, because the costs of planning, as already noted, create a number of important advantages in the activities of the firm. Therefore, the question of costs would be properly formulated as follows: what should be the additional costs needed in order to expand the scope of planning in the organization?

The minimum result of planning is the prevention of gross errors in economic activity, that is, the acquisition of the ability to foresee unpleasant future circumstances and eliminate them. If the funds spent on planning have led to such a result, this is already almost enough.

We can formulate the following rule for determining planning costs: any additional funds should be spent only if they create an additional positive effect. And besides, you shouldn't take on the development of a plan that could cost as much as the cost of creating a better plan.

Thus, the minimum costs of business planning are those that ensure the survival of the economic organization, and any additional costs should ensure its development.

The difficulty in determining optimal costs lies in the fact that the income received from planning cannot be measured accurately using quantitative methods. An experienced manager can determine the effect of planned activities using qualitative and subjective evaluation methods.

The scale of the company

The scale of the company's activities limit or, conversely, expand the possibilities of planning in the organization.

The advantages in intra-firm planning are held by large firms because they have the necessary capacity to foresee their future:

they have higher financial opportunities;

they are mostly engaged in serious scientific and design developments;

they have highly qualified personnel and are able to attract the same highly qualified specialists from outside, etc.

Large firms, as a rule, have special planning divisions in their composition. At the same time, even reputable economic organizations often turn to external consultants specializing in planning issues to determine their planning strategies. Due to the rapid spread in recent decades of strategic planning, some consulting firms have made it their exclusive field of activity. Such firms are sometimes referred to as "strategy salons".

It is difficult for small economic organizations to carry out large-scale planned work, especially expensive strategic planning. However, they may:

use some form of planning, especially operational planning;

apply ready-made strategy models created by well-known companies and research firms (such as the BCG matrix, the McKinsey 7C model, and others), and strive to determine their own strategies as the organization grows.

Despite the difficulties of planning in a small organization, it is necessary for it, perhaps even more than a large one. The external environment of such an organization is less controllable and more aggressive than that of a large firm, therefore, the future of a small firm is more uncertain and unpredictable.

It must be said that a small firm has its own advantages in organizing planning. The main one is that the internal environment of such an organization is simpler, and therefore more visible and predictable. In addition, in a small organization it is easier to create a special psychological and social climate that allows people to rally around the interests of the organization and its goals.

It is hard to imagine a business plan for which you would not have to create calculations. Certain calculations require all parts of the business plan: marketing, operational, production.

But the most important in terms of calculations is the financial part of the business plan. It is she who allows you to identify how profitable and sustainable the business will be created.

The financial part should answer the following questions:

• How much money will you need to start a business?
• How much profit will it bring?
• How soon will the business pay off?
• How sustainable and profitable will it be?

Each of these questions is answered by one of the parts of the business plan. This means that in the structure of the financial part of the business plan there will be such sections as investment costs, profit and loss forecast, cash flow and project efficiency assessment.

Investment costs

The first thing to do when writing a business plan is to calculate in detail how much it will cost to create a business. This will allow the entrepreneur himself to understand how much money is needed to start a business and whether it is necessary to attract loans.

In this part of the business plan, you need to take into account all the items of expenses associated with starting a business. For clarity, it is worth referring to an example. Consider a business plan for the construction of a car wash for two posts. You will have to invest both in the construction itself and in the purchase of equipment. In general, the list of investment costs for this business will look like this:

• Design work
• Procurement of building materials and construction work
• Connection to electricity, water supply and other engineering networks
• Purchase of equipment
• Installation of equipment

According to Aidar Ismagilov, the owner of the Moidodyr car wash network in Kazan, the construction of a car wash will cost 30-35 thousand rubles per square meter, taking into account design work and communications. As a result, the amount turns out to be quite solid, so now renting is more popular among novice businessmen, rather than turnkey construction. In this case, the investment plan will include both rent payments before opening a business and renovation of the premises.

Equipment costs will depend on the type of sink. If the car wash is of a manual type, then it will be enough to lay 400 thousand rubles for equipment. But for an automatic car wash, the costs will be at least 300 thousand euros.

For calculations, it is better to take a certain average price for each of the cost items. For example, if you need to calculate the cost of renting real estate, you should take into account not the highest and not the lowest price per square meter, but the average price on the market. You can determine it by examining the rental offers in your city.

Another thing is if the supplier and his price are already known in advance. For example, a car wash requires only equipment from a strictly defined manufacturer. Then in the calculations you need to include exactly the prices that he offers.

Knowing the required amount of investment will allow not only to estimate how much money will be needed to start a business, but also how quickly it will pay off.

Profit and Loss Forecast

If you subtract the amount of business expenses from the amount of business income, you can find out what is the net profit. This indicator is much better than income, shows what the state of the business is and how much you need to invest in its further development.

At the beginning of a business, expenses often exceed income, and instead of net profit, there is a net loss. In the first months or even a year of work, this is a normal situation. You should not be afraid of it: the main thing is that the loss is reduced every month.

When making a profit and loss forecast, all indicators should be calculated monthly until the business pays off. At the same time, you should not make the forecast too optimistic: imagine that the income will not be the maximum possible, take the average figures.

Cash Flow

For a business that is still at the start-up stage, it is important to understand not only what its net profit will be. One of the most important indicators is the so-called cash flow or cash flow. By calculating the cash flow, you can determine what the financial condition of the business is and how effective the investment in it is.

Cash flow is calculated as the difference between cash inflows and outflows over a given period. If we return to the car wash example, then in order to calculate the cash flow in the first month of its operation, it is necessary to take net profit for receipts, and the amount of initial investment for outflows.

In this case, it will be more convenient to calculate if the outflows are designated as a negative number. That is, we add a minus sign to the amount of initial investment in a car wash, and add the net profit in the first month of work to the resulting number.

To calculate the cash flow in the second month, you need to find the difference between the result of the first month and the net profit received in the second month. Since the first month turned out to be a negative number, the net profit must be added to it again. The cash flow in all subsequent months is calculated according to the same scheme.

Project efficiency assessment

Having predicted profits and losses, as well as the cash flow of a business, it is necessary to move on to one of the most important sections - evaluating its effectiveness. There are many criteria by which the effectiveness of the project is evaluated. But for a small business, it is enough to evaluate only three of them: profitability, break-even point and payback period.

Profitability business - one of the most important indicators. In general, in the economy there are many different indicators of profitability - return on equity, return on assets, return on investment. All of them allow you to evaluate the effectiveness of a business in its various aspects.

To understand exactly which profitability indicators should be calculated in your business plan, you need to refer to the requirements of an investor or a credit institution. If the goal is to evaluate the profitability of the business "for yourself", it will be enough to calculate the overall profitability of the business.

Make it simple. It is enough to divide the profit of the business by the amount of its income, and then multiply the resulting number by 100 to get the result as a percentage.

It is difficult to name the optimal indicator of business profitability. It largely depends on the size of the business, the type of activity of the company. For micro-businesses with revenues up to 10 million rubles, a profitability indicator of 15 - 25% is considered good. The larger the business, the lower the percentage received can be. In the case of a car wash, the normal rate of return is from 10 to 30%, says Aidar Ismagilov.

Another indicator that needs to be calculated is breakeven point. It allows you to determine at what income the company will fully cover its costs, but so far will not make a profit. You need to know this in order to understand how strong the business is financially. To find the break-even point, you first need to multiply the business income by its fixed costs, then subtract the variable costs from the income, and then divide the first number obtained by the second.

Fixed costs are those that do not depend on the volume of goods produced or services rendered. Businesses incur such expenses even when they are idle. In the case of a car wash, these costs include salaries for accountants and administrators, utilities and communications, depreciation, loan payments, property taxes, and so on.

Variable costs are anything that changes with the volume of production. For example, at a car wash, the costs that change with an increase or decrease in the number of washed cars are the cost of auto chemicals, water consumption, and piecework wages.

Having received a certain number as a result of the calculations, you can correlate it with the income statement. In the month when the business income reaches or exceeds the amount obtained as a result of calculating the break-even point, it will be reached.

Most often, the break-even point is not reached in the first month of the business, especially if it is related to production. According to Aidar Ismagilov, in the case of a car wash, reaching the break-even point depends on the season. If the car wash opened during the dry summer season, when there is little demand for services, they will be unprofitable throughout that season. If the opening took place during the season of high demand, then you can reach the break-even point in the first month.

• Gross profit \u003d revenue - cost of production.
• Financial profit = financial income - financial expenses.
• Operating income = operating income - operating expenses.

The balance sheet profit is calculated as follows:

An important indicator is profitability, it is calculated as follows:

Most often, it is necessary to determine the return on capital, assets, products. The profitability of activities is calculated as the ratio of profit from sales to costs.

Important: for the base year when planning the criteria for economic efficiency, the current year of the business plan is taken.

Cash flow planning

Cash flow planning includes a forecast of cash receipts from all sources, it can not only be income from sales, but also interest from the sale of shares or the lease of land.

When forecasting the movement of funds, the following aspects are taken into account:

• the total amount of money invested in starting a business;
• assets and liabilities of the firm;
• forecast of profit (income from sales and interest on rent) and losses (expenses on materials and wages of workers employed by, inflation, payment of interest on a loan);
• evaluation of financial efficiency.

In performance planning, all cash costs and revenues are discounted and brought to present value.

Table 1 - Example of cash planning

Indicator	1st year	year	3rd year	4th year	5th year
Cash	X	X	X	xx	xxx
The arrival of money
Sales revenue	X	X	xx	xxx	xxx
Proceeds from the sale of shares	xx	X
Total income
Spending of money
Operating costs
Payment of salary
Raw material
Other costs
Capital investment
Payment of interest on a loan	X	xx	xx	X
Repayment of accounts payable	X	X	X	X	X
Paying income taxes					xx
Total Expenses
Total cash

When making a forecast, it is important to take into account such aspects as the inflation rate (taking into account the optimistic and pessimistic options) and risks.

The activities of the firm may depend on:

• commercial risk (includes aspects such as problems with the sale of goods or the activities of competitors);
• financial risk (includes aspects such as insufficient financing of the project, inability to return borrowed funds);
• production risk (includes aspects such as poor equipment, low quality products) and is a part for investors.

The balance of assets and liabilities is compiled based on the calculation of net profit and cash turnover.

Enterprise balance forecast

The company's balance sheet contains specific indicators that reflect the success of the company. The forecast is made at the end of each year, and all the features of the company's activities for the coming year are taken into account. This may be a loan of funds or attracting investors.

After drawing up the balance sheet, you can see the rate of return, return on assets and capital, the ratio of own to borrowed funds in the future.

The company's balance sheet might look like this:

Table 2 - Balance sheet of the enterprise

Assets	1st year	2nd year	Liabilities and capital	1st year	2nd year
Working capital:			Short-term liabilities:
cash			short-term debt
accounts receivable			settlements with creditors and suppliers
inventory			Long-term debt
other			Tax debt
Main capital			Equity
Initial cost:			Profit to distribute
depreciation
book value of fixed capital
other
Money
Intangible assets
Total			Total

Summing up, reports are prepared containing the financial indicators of the business plan. Namely, income and expense statement, cash flow statement, asset and liability statement.

The financial plan, as an integral part of the business plan, involves the provision of all calculations for a period of up to 5 years, thanks to which you can see the main economic indicators, as well as identify the liquidity of the project model.