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ISSUE # 11 page 3 NOVEMBER 1997
THIS YELLOW SOFT CORAL IS IN
TIM WEIDAUER'S REEF AQUARIUM
AND YOU CAN LEARN TO DEDUCT
THE COST OF GROWING THEM FOR
BROOD STOCK .
FINANCIAL STATEMENTS & FILING BUSINESS DBA FORMS
In its simplest form the BALANCE SHEET we can consider as a 'report card'. The sole purpose of a BALANCE SHEET is to show the Financial Position of a given business entity at a specific date. Every business prepares a Balance Sheet at the end of each year, and many prepare them at the end of each month. If, you are using one of the accounting software programs that I have mentioned such as Quick Books, or Peachtree Accounting or one of the similar programs available for business accounting then you will have the capability of producing a BALANCE SHEET, or other financial statements at the pressing of a key at any given time.
There are three widely used Financial Statements used in businesses, they are the BALANCE SHEET, THE INCOME STATEMENT, & STATEMENT OF CASH FLOWS. The Cash Flow Statement is very similar to the operating budget we discussed previously, except, that it is a RECORD of our Cash Flow rather then a projected budget of cash flow. It is a historical record of where our cash went, and is. The Income Statement is a record, in a financial statement form of our Income, and Expenses for a given time period. All of these statements are valuable to us in keeping an accurate record of our business activities, and, to report to us, and interested parties(our banker for one) as to the financial condition of our business in a period of time.
Another name for a BALANCE SHEET is a "STATEMENT OF FINANCIAL POSITION". The BALANCE SHEET is important as a companys' financial position can change very rapidly. Also it gives us a picture of where our financial assets are concentrated, our debt position, and our own equity in the business. Assets are the economic resources that are owned by a business, and are expected to benefit future operations, they may have physical form, such as buildings, land, tanks and vats, breeding stock, or be in intangible forms such as GOODWILL, or accounts receivable or patent rights. One of the most basic and difficult problems is determining dollar values for our assets, and presently, generally accepted accounting practices value most assets at appraised or acquired costs or current market value for some assets.
ASSETS are one of the three main components in a BALANCE SHEET. The other two major components are the LIABILITIES, & OWNERS EQUITY.
LIABILITIES are debts, pure and simple. The person or organization to whom the debt is owed is the creditor. The debts are usually classed as current or longterm liabilities. Examples of current debts are Accounts Payable, such as to suppliers, utilities, and rent and shorterm notes payable. Long term Liabilities include mortgages on land and buildings, or long term loans. One thing to know and understand is that Creditors Claims have priority over the claims of the owners. Liabilities represent claims against the companys assets, and, in the eyes of the Law, the creditors claims TAKE PRIORITY over the owners claims! This is one major reason to keep debts low, and, ideally, non-existent, other then short term operating expenses as with utilities.
OWNERS EQUITY represents the Owners Claims to the assets of the business. Because Creditors Claims have priority over the Owners Claims the Owners Equity is called a RESIDUAL AMOUNT. If you are the owner of a business you are entitled to 'whatevers left' after the claims of creditors have been satisfied. Therfore, OWNERS EQUITY = TOTAL ASSETS MINUS TOTAL LIABILITIES. Owners Equity doses NOT represent a specific claim to cash or any other particular asset, rather it is the owners 'overal financial interest in the entire company'.
Owners Equity increases by: Investment by the owner, and by Earnings from profitable operation of the business. Decreases in Owners Equity occurs through Withdrawal of Cash or Other Assets, and from losses of the companys' operations.
The BALANCE SHEET is the financial statement that gives us the information to compare our position at any given time as to the amount of the Assets, the Total Laibilities, and the Owners Equity. I am not going to go into a discussion as to how to prepare a BALANCE SHEET, I will illustrate a simple one. This is something that you can sit down with your accountant and prepare a yearly one, and, if you invest in one of the mentioned accounting programs you can prepare one for yourself at any time that you desire to have it just by requesting it in your program. All of the information necessary to make up the Balance Sheet is extracted from information contained in your ledgers and general journals. This is why your accountant, or accounting program can make a Balance Sheet.
The BALANCE SHEET is a more detailed statement of the previous fomula, and is restated by laying the format out to express the formula:
ASSETS = LIABILITIES + OWNER'S EQUITY.
|When we add notes payable
debts we decrease the owners equity.
Debt is bad for Owners Equity.
Stay out of debt if there is any way possible,
'grow as you go.'
Ideally, in the Liabilities section we would only find short term operating liabilites such as utilities, but when we add notes payable debts we decrease the owners equity. Debt is bad for Owners Equity. Stay out of debt if there is any way possible, 'grow as you go." For our kind of enterprise I would never suggest any debts beyond what you can realize through maximizing out a credit card, and that only after a lot of soul searching. Stay out of debt. The history of farming for the aquarium hobby is full of the stories of failed enterprises that had great ideas, great products, but too much debt for the enterprise to carry.
Develop good products, price them competitively, give good service and stand behind your products, and stay out of debt.
There is one topic I have mentioned a num ber of times since beginning this series, and that is getting the 'DBA' certificate, the 'doing business as..." certificate. I want to spend a little time here discussing this more as I have had a number of emails on it. In a few states this is combined with business licenses, most it is not.
The DBA is one of the best ways that you can show the IRS, and the world in general that you are serious about being in business. You can deduct legitimate business losses from an enterprise against your other income, if, the IRS considers the business to be a bona fide business and not a hobby, hobby losses are not deductible from your income on your 1040. Hobby INCOME however is reportable income, not reporting it is in fact illegal. Business losses can be deducted from your income on your 1040 for three years retroactively by filing an amended tax return, or, can be carried forward for up to fifteen years against your other income. This alone is adequate reason to be established as a legitimate business. This involves a couple of simple actions on your part and I will discuss them here.
First of all, and I will use NYS as an example, this can vary somewhat from state to state, but, most are similar. Go to 'Kinkos' or 'Office Max', or an ofice products store, and get 3 blank copies of a DBA certificate. Fill them out, have them notarized, with your name of choice of your business. You then file it with your county ofice, Office of Assumed Names, which may be within your county treasurers office. You will need a postal money order or bank cashiers check most likely for the fee, some county offices will accept private checks, some wont. While you are in the County Office, check to see if there are any other business already using your name, ifnot it is yours, pay for your certificate filing, and file it with the county. Thats all there is to that.
You should also open a separate bank checking account for the business, it is more proof to the IRS that you really are in business with the INTENT TO MAKE MONEY. Bring along your new DBA certificate when you open your account, and open the account in your business name.
The next step is the one to obtain your Federal Tax ID Number. It is obtained by acquiring from your local IRS office form SS-4, Application for Employer Identification Number. Read and fill out the application, make a copy of it, and mail the original signed application to the address given for your state, its a good idea to mail it certified mail, return receipt requested.
Taking these simple steps will help to insure that you will be taken seriously by the IRS when and if you do need to file a loss for your first year of operation in startup costs. You will be filing on your regular 1040 return, and itemizing your deductions, and, also filing an additional form along with your 1040. next month I will be discussing this form, and how to enter the information on your 1040 return.
I have received some interesting emails on this series, plus questions on reef propagation in general and appreciate your input, and questions. if, you have any questions at all on things that I have discussed in this series then by all means email me and I will address your concerns and questions and, if they seem to be of enough interest I will answer the question also in the next months newsletter along with a reply back to you. We are all in this together, so your questions could also be the very thing that someone else is wondering about, share your questions and if I dont have the answer I can find someone who probably does have an answer.
It is very important to involve everyone in this family project. We have never met a child who is to young or to old for this kind of fun. Working with your children in a family setting allows them to learn as well as have fun. Remember when working with your children they are our future scientists they will be leading the reef causes well after we are gone. Explain to them the purpose of making your own rock and most importantly let them be creative in the shapes and styles that are developed. These aragacrete rocks featured in these pictures where made by these talented young people.
I have often watched LeRoy play like a little boy in his sand box (he calls it his beach) this is where the fun begins. So that mom doesn't get upset make sure you lay down a piece of plastic or make your own sand box. Follow the posted instructions that LeRoy has on our newsletter site, roll up your selves and let your imagination take over.
It is fun to go to the ocean and bring back ideas of how some of the live rock is shaped but, in all honesty I have seen better structures made by hand than come from your local pet stores. The other fact is that no matter how you choose to make your own designer rock they will fit into your reef tank any way you want them.
Once the tank is full of your very own designer rock you can then sit down and discuss how you want to place your animals. The rocks that are formed like caves gives you more opportunity to raise animals that don't like alot of light or current. You can glue animals anywhere in this newly set up reef they will grow on their own and provide the family with an enriching educational experience that they can pass on.
We hope to have reef tanks set up in every classroom for every age level. Now that is no longer legal to collect live rock in the US oceans this method of making your own rock needs to be shared. You can seed this rock with some of our coralline algae eggs and within a months time you will notice the coralline algae growing on all your aragacrete rocks. This will not only take the burden off the ocean it will teach us all to take responsibility and appreciate our systems far into the future.
Once your rock is in place and you've drafted your ideas about which animals you want to raise your well on your way for the journey of your life time. It is hard in todays busy World for the family to turly find projects to do together. This is one that would make your family enjoy being together and proud to be taking a part in. These living reefs become your pets and if you care for them properly and nuture them they will grow and make babies that you can all be proud of. We would like you to send us some pictures of your creative ideas and we in turn will share them with the rest of the World.
Thanks to G.A.R.F. for all the info, help, and ideas.
It's a warehouse full of coral and fish.
My heart rate seems to increase while in
Corals are kept in five different systems; SPS, LPS,
They have been in business for 3 years. The facility consists of several different systems totaling approximately 35,000 gals. of salt water. Strange as it may sound, I did not see a single protein skimmer! Algal Turf Scrubbers (ATS) are the primary source of filtration. I was told there has not been a water change since the system(s) was started. They just top off with RO water. Each system has its own set of commercial size ATScrubbers designed by and licensed to Aquatic Technologies, Inc.(parent company of IA). I was not very familiar with this type of filtration before visiting IA, but it seems to work very well. For more info on the algal scrubber concept, look at Reef Aquarium Farming News #4 pg.2, Apr.'97. "The Natural Reef".
The owners of Inland Aquatics are Richard and Morgan Lidster, father and son. Morgan has a Bio Degree from I.U., which is also in Terra Haute. There are 6 employees who are very busy (I saw a help wanted sign). I haven't met all of them, but the two I have met are very friendly and knowledgeable. Eric Burgess is the Coral Operations Manager. I must thank him for putting up with me and all my questions. This guy knows his corals! He's a good photo assistant too!
Eric has just finished an article entitled "The Truths and Myths of Algal Turf Scrubbing" . Look for it soon in FAMA magazine. Mike Liffick is the Lab Manager. He has helped me get my green water culture going. Thanks to Mike in advance for helping me culture rotifers. If you are interested in starting your own culture, I'm sure Mike would be glad to help. Florida Aqua Farms, Inc. publishes the Plankton Culture Manual, which Mike considers to be "the book" on plankton culturing. I've found it very easy to understand and it is scaled to hobbyist or commercial size. Supplies to get you started are available through IA. The building housing Inland Aquatics is separated into different areas. The production area (known as Aquatic Technologies, Inc.) is the largest. It's a warehouse full of coral and fish. My heart rate seems to increase while in this area.
Corals are kept in five different systems; SPS, LPS, mushroom/zoanthid,soft corals and one with xenia, anthelia, and star polyps. The last system mentioned now has some colonies of pulsing xenia that I propagated in my tank! There is another system dedicated to breeding fish. IA offers a variety of captive bred fish. In one particular tank, there was a pair of clowns cleaning a ceramic flower pot. This ritual is performed just before the female deposits her eggs there. The pot is then put into another tank so the eggs can get lots of aeration to help them hatch out. I don't know a lot about breeding fish, but it looks very interesting.
I bought two bullet proof tanks from a friend (55 & 20 gal.)
I've been propagating the pulsing xenia and
various zoanthids that I ordered from G.A.R.F.
I'm now up to 20+ colonies of xenia propagated
from the original and I'm just getting started.
Thanks to G.A.R.F. for all the info,
On Friday, Saturday, and Sunday tours are given for a small donation. There is also a lab area where all the plankton culturing takes place. Mike maintains cultures of green water, rotifers and artemia nauplii (baby brine shrimp) to feed the fish larvae and invertebrates.
This is just a brief review of what is happening at Aquatic Technologies, Inc./Inland Aquatics. I look forward to my future trips to this facility. I always learn something exciting and new when I visit. I would like to thank Morgan for allowing me to take pictures so everyone can see the place. If you are in the area, definitely pay them a visit.
St. Charles, Missouri
We will ask Mike to update this story after his next visit, and I will have the photos he sent ready. LeRoy
Use this site to solve your reef aquarium algae problems, and help support our research!!!
Learn how you can grow a wonderful reef aquarium like the one we visit in this May 1997 special feature
You can learn how a reef aquarium grows into a mature sps coral reef
Sally Jo's 55 gallon reef is starting to mature into a small polyp stony coral aquarium
We will add more about this aquarium each month
JOIN THE RESEARCH FOUNDATION
You can support our research and learn more about reef aquariums and wetlands
1997 WINTER - SPRING NEWSLETTER Our foundation is growing - Please visit our Newsletter
REEF AQUARIUM FARMING NEWS
CORALLINE ALGAE PROPAGATION
COMBINATION ROCK PROPAGATION
COMBINATION ROCK BASE ROCK SELECTION
COMBINATION ROCK SPECIES SELECTION
LOW COST BULLET PROOF REEF AQUARIUM
55 GALLON INSTA REEF
Visit Rachel's 12 week old Bullet Proof Reef Aquarium
MORE PICTURES OF THIS REEF AQUARIUM
Geothermal Aquaculture Research Foundation,Inc. online tour
Super glue research page
Super Glue evaluation page
Our researchers rate many brands of super glue
Geothermal Aquaculture Research Foundation Feed Back page
E-mail input so we can make these pages better
Natural Algae Control
Reef Janitor Order Page - red leg hermits, snails, grunge.
Research page for Xenia and related soft coral propagation
Learn to propagate xenia. Please enter any data you have about these corals.
Soft Coral Propagation Page
Pictures and details of soft coral propagation
Stony Coral Propagation Page
Pictures and details of small polyp stony corals
Mushroom Anemone Propagation Page
Pictures and details of mushroom propagation
Zoanthid and palythoa Anemone Propagation Page
Pictures and details of Sea mat propagation
Image Page for Zoanthids and Palythoa
This is one of our most popular pages. Many people have made their own reef aquarium.