What Accounting Reports Do Small Business Owners Need To Know?

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Do you do any selling online? Did you know that selling things online can count as a business and that you could be losing money if you don't prepare your taxes just right? Online sales have helped my family get through a very difficult year. Then, when I found out what I was going to have to pay in taxes for the income that I earned through those online sales, I about had a heart attack. After doing some digging, I decided to skip filing my taxes myself and took them to a professional for help. Find out what an accountant uncovered for me and how it helped put my money back in my pocket.


What Accounting Reports Do Small Business Owners Need To Know?

2 October 2019
 Categories: , Blog

A small business owner isn't necessarily an accountant. Even if you've run a business for quite some time, there comes a time when you need professional help for your accounting. But what reports do you need? What information is relevant to you as a business owner — and what information is best left to the accountants themselves?

Profit and Loss Reports

Your profit and loss reports are central to the health of your business. These reports tell you how well your business is doing. How much money are you really making? You can have a lot of revenue, but if your expenses outpace them, you're not going to be able to really succeed. 

Balance Sheets

Let's think of this quite simply. A balance sheet is a list of what you have, what you owe, and what others owe you. It's also a good indicator of the health of your business. If your business is doing well, but you have more debts than assets, it isn't going to look good on paper — not to investors, and not to creditors. A company should always keep its balance sheet under control.

Reconciliation Reports

At the end of every month, your bank account is reconciled with your bookkeeping. If your reconciliation isn't correct, it's a sign that your accounting hasn't been done correctly. Take a look at your reconciliation reports, because there may be things that jump out at you. Something might not have been booked correctly, and you might need to correct it.

Cash Projections

Cash projections tell you how much you're likely to make or lose in the coming months. Your cash projections might show you gaining $40,000 over the next two months, or may show you losing $20,000 over the next two months. This is incredibly important, because it shows you the trends of your business. If you're currently losing money, your cash projections will show you how long you have until you run out of money completely.

Accounts Payable/Receivable Reports

Finally, your AP/AR reports show you the specifics of your bills and your payments. Who still owes you money on invoices? What bills do you have left to pay? As a business owner, this is related to the business management side more than your financial affairs. 

Small business owners should request these reports on a monthly basis, because they're necessary for making important decisions about the business. If you don't know how your business is doing, you can't make plans for the future. Take advantage of a business accounting professional for more information on your business reports.