Your financial reports can be far more useful than just a report on the state of your business.
You can use these reports to manage your business, diagnosis what’s going right and wrong, and set goals for how to grow and add to your bottom line.
What are financial reports?
Financial reports are issued at set intervals and go to shareholders, partners, investors, and potential lenders. They describe your company’s financial strengths and weaknesses and typically contain the following:
- Balance sheet: includes statement of liabilities, assets, and business capital
- Income statement: reports on a company’s financial performance, how it gets revenue, and how and incurs expenses
- Cash flow statement: shows how the changes in the balance sheet affect cash and cash equivalents that flow in and out of the company
Clearly, these financial statements are essential to run your company on financial fact, not hopes and prayers. Keeping these records thoroughly is the first step in running a successful business, being prepared at tax time to pay the IRS, and accurately valuing your company should you decide to sell. Any lender or investor will want to see your financial report before deciding whether they want to hitch their money to your star.
Why GAAP is a smart move
Although some companies generate their own financial statements, many turn to their accountant to formalize their statements according to GAAP, Generally Accepted Accounting Principles. It’s a smart move; here’s why:
- Accountants can present your numbers so they are easy to read and understand.
- If you’re a public company, accountants can provide audited financials that are certified by an independent entity.
- Accountants can professionally format your numbers, give the statement a fancy cover, and state that an independent accountant has accepted your numbers.
Hidden gold in financial statements
Financial statements are a great tool to help you answer questions about your company and to manage money and priorities. At a glance, these statements can help you determine critical expenses as well as evaluate whether your financial position is getting better or worse, whether your staff is contributing enough to the bottom line, and whether you’re meeting set benchmarks.
We’ve got your back
We can help you compile and analyze your financial statements. Rather than guessing at financial statements, why not let the experts at KRS CPAs help? Contact us at 201.655.7411 for a complimentary initial consultation.