Owning a small business can be a dream come true for many people. While it might seem dreamy to be your own boss, it can also be challenging to stay on top of all the tasks that keeps your business afloat. One of the most important things to stay on top of as a business owner is your financial statements that allow you to have a clear picture of the financial health of your company. Propel Your Accounting is here to talk about some of the financial statements that are essential to owning and running a successful small business.
Balance Sheet
As a business owner, it’s important to have a snapshot of your company’s financial statement at any given time. This is what a balance sheet can provide. Some of the main insights that a person can gain from a balance sheet include:
– Assets: The assets a company has will be listed on a balance sheet. This can include not only current assets, but long-term assets as well. It might include property owned by the company, equipment, and even inventory that can be sold at any given time to generate cash.
– Liabilities: Just like assets, there are both current and long term liabilities. Current liabilities include debts that need to be paid within the year. A long term liabilities are debts that are things like long term bonds and loans.
– Equity: Then the equity portion of the balance sheet is the difference between the assets and liabilities a company has. Another word for this is the company’s net worth.
Income Statement
Another valuable financial statement is the income statement. Some people might know this as the profit and loss statement. This can help you see how profitable your company has been. When you know what your profits look like, you are better able to make sound financial decisions. You will be able to see the revenue that has been a result of goods or products sold. You also will see what your operating expenses look like as well.
Cash Flow Statement
One of the most important financial statements that a small business can have is the cash flow statement. This is because it provides you with valuable information about the ability your company has to generate and manage its cash flow. You will see the inflow and outflow of the cash you use to run your business. When you have a clear understanding of this financial statement, you will be able to see your company’s position financially so that you can determine whether or not you can meet your financial obligations.
Bookkeeping, Accounting, Business Consulting & HR / Admin Services in the United States of America
If you are having a hard time keeping up with the important financial statements that help you manage your company’s finances, you can turn to Propel Your Accounting to give you the help you need. We can take care of all your bookkeeping needs as well as tax preparation and more. Call us today!
