So you’re turning your passion into a business- good for you. One of the most challenging parts of operating a business is determining the financial necessities for starting and maintaining a business over the years to come.
Here are three critical financial documents that you need to be familiar with and plan on using.
Want to know where your business stands at the moment? This is the document that will give you that information. It adds up all of the company assets (vehicles, equipment, things owned by company, etc.) and subtracts liabilities (money your business owes) to calculate the business net worth.
Cash Flow Statement
Do you know how much money is coming in and going out of your business? The cash flow statement looks at specific date and time periods to help you watch for potential shortages and help prevent you from falling on hard times. Learning how to manage your cash flow is critical to keeping your business afloat.
Profit and Loss Statement
Do you know what your bottom line is for a certain period? Are your prices too low or are your expenses too high? Reviewing your profit and loss statement on a regular basis will help you determine where you’re missing the mark. If you intend to seek business financing, you may be required to prepare a profit and loss projection for several years ahead to prove you are sticking to a business growth plan.
We can help you with setting up your books and handle your bookkeeping for you to help you manage your cash flow and review these documents with you on a regular basis. If you have any questions about our bookkeeping services or would like more information, feel free to call us at (800) 416-3820.