Financial Success: Small Business Accounting
To most business owners, small business accounting is like eating your veggies; you don’t really enjoy it, however you know it is good for you, and you feel better after it’s done. It isn’t the most fun or exciting thing to do, so it is easy for the task to but pushed aside for another day. Small business accounting can be confusing, time-consuming and downright frustrating (isn’t that why you hired a CPA?). However, it doesn’t have to be as hard or painful as you think! You can discover a ‘wealth’ of information if you know where to look and how to read the statements. (Need more help on this topic? Check back next week for tips and tricks on reading statements)
Let’s start by breaking down what is most important in small business accounting analysis. Your time is valuable, and in short supply, so let’s focus on the statements that will yield the biggest bang for their buck. Below is a list of financial statements that I want you to see, and review, regularly:
- Income Statement, (also called Profit and Loss)
- Balance Sheet
- Operations Dashboard
Like to Have
- Statement of Cash Flow
- Customer List sorted by Revenue
- Product/Service Line Profit and Loss by month
- Key Financial Data by Month since Inception, recorded to allow reporting of year over year data (comparing same month, different years)
- Key Operating Data by Day, to allow comparison of operating data by day of week, by week. What I really want is for you to see your key items sliced in any possible way you can imagine. This requires some up-front thinking and analysis and someone good with a spreadsheet.
- Key Ratio report showing monthly trend
This list may seem overwhelming at first, but once you get into the groove of reviewing statements, it becomes painless and eye-opening. Don’t know what to look for when reviewing these statements? Check back later for the next post detailing more small business accounting tips and how you can use statements to grow, prevent disasters, and increase your cash.
Tags: Business Finances