When it comes to running a business, there are several financial statements that work together to give you a good idea and understanding of where you’re doing well as a business and where you could improve. Together, these financial statements help you make decisions to improve and grow your business with confidence. However, there is one statement that seems to stand out from the rest. Mark Dicus & Company is here to talk about an income statement, what it is, and why it is often referred to as the most important financial statement for a business.
What is Included in an Income Statement
If you look at a company’s income statement, you will be able to see the revenue and sales, costs, gross profits, estimated taxes and even more information about income and expenses. This information is incredibly important for any executive team, founders of a startup, private investors, or even lenders trying to approve a loan application. All of these figures can be incredibly overwhelming for those that aren’t good with figures and math. However, an income statement will lay them all out so that the finances are more easily understood.
Importance of an Income Statement
There are several ways that an income statement can be beneficial for business owners that are interested in helping their businesses grow and find success. Here are some of the reasons why it’s such an important document:
– Picture of Profitability: You can know exactly where your company stands financially with an income statement because it tracks your profitability.
– Decision Making: Business owners need to be able to make decisions for their company quickly when opportunities arise. The income statement allows that to happen and aids in making quick decisions that take advantage of the opportunists that come your way.
– Tax Compliance: This document gives insight into the tax liability of a company when coupled with the cash flow statement and balance sheet.
– Tracks Cost of Goods Increases: It will show production expenses as well as a percentage of sales.
– Strategic Planning: To make plans for your company’s future, you need to know where you are right now and where you’ve been. The information in an income statement can provide information that includes financial health, growth opportunities, evaluating risk, and allocating resources.
– Helps with Mergers & Acquisitions: Before someone wants to acquire a business, they want to see whether or not it is in the black or the red. They will also want to see the prospective growth of a company. The income statement can provide this information.
Tax Preparation, Filing, Planning & More in Salt Lake City, St. George, West Valley City, Provo, Orem, West Jordan & Greater Cedar City, Utah
The importance of financial statements for your business cannot be understated. At Mark Dicus & Company, we will help prepare all of these documents and keep them organized. So that you can benefit from them as much as possible. Call us today!