As a small business owner, you will find out quickly that you must stay on top of the numbers for your business to find success. For many businesses, this isn’t something that they excel at. Running the business is the strength, but crunching the numbers is often best left to a certified accountant. For small businesses to thrive, they need to have certain financial statements to give them a clear picture of the state of their finances. Mark Dicus & Company is here to talk about some specific financial statements that are necessary for small businesses.
Essential Financial Statements for Small Businesses
When your financial statements are accurate and up to date, they can tell a story about your business. This can help with forecasting and informed decision making. Here are the vital financial statements that every small business needs to have:
– Balance Sheet: You can tell a lot by looking at your balance sheet. This is a picture of your business at a certain point in time. You can clearly see what your assets look like, your liabilities, and your equities. Assets are things your business owns of value. Some different examples of assets could be cash, equipment, inventory, property and more. Liabilities include all the financial obligations that your company has. These are loans or unpaid bills. And finally, equities are portions of the business that are owned by shareholder or investors. When this is calculated, it equals assets minus liabilities.
– Income Statement: Some people might refer to the income statement as a profit and loss statement instead. They are one in the same. This is the place where you will see the money that your business has brought in, revenue, and the money that goes out, or expenses. This is the best way to know whether or not your business is making money or losing money. Business owners can analyze their income statements in a couple of ways. First, horizontal analysis which shows the line items in percentages. Secondly, you may view it in vertical analysis in which you will compare the line items using dollar amounts instead.
– Cash Flow Statement: The last crucial financial statement for any small business is the cash flow statement. This piece of financial information will show you how the cash is moving in and out of your business. This is usually broken down into a few different categories. First, operating activities shows the cash that you generate from day-to-day operations. Secondly, investing activities will track the cash you are using to buy or sell assets. Lastly, the financing activities is the cash flow used to pay off debts or raising capital.
Bookkeepers, Accountants & More in Summerlin, North LV, Henderson, Lone Mountain Village & Greater Las Vegas, Nevada
If you are a small business that is looking for help in bookkeeping and accounting services, you can turn to Mark Dicus & Company to help you gather and track this vital information. We will also help you with tax preparation as we work to help you reach success. Call us today!