Accurately tracking your business’ financial data is not only important for running your daily operations, but it’s also essential when you seek funding from investors or lenders to grow and expand your company. Additionally, keeping track of your finances can help you ensure that your services and products are priced right, determine what your business’ cash flow is like, and make filing your company’s taxes easier. To make sure that your business’ finances always stay on track, there are three basic accounting statements that we will compile for you every month.
1. Balance Sheet
This balance sheet provides you with an overview of your business’ finances. This particular financial statement is based on this equation:
Liabilities + equity = assets
The two sides of this equation must be balance out, and you should review the details of this statement every month.
2. Profit and Loss Statement
Commonly referred to as an income statement, a profit and loss statement is one accounting document that can enable you to project what your future sales and expenses will be. Although it’s best to have one of these statements developed on a monthly basis, these statements typically cover a period of a few months.
3. Comparison Statements
Understanding your business’ progress over time can help you understand how far you’ve come and what else needs to be accomplished before you reach certain goals. Comparison statements allow you to see where your business stands in comparison to its situation at a previous time.