Financial Statements

Home » Finance » Financial Statements

Tips & Advice to help you make your decision on Financial Statements

Some companies compare using financial statements to driving a car while looking in the rearview mirror. This is a point of view that is somewhat self-destructive. These statements are necessary; they are historical financial statements that give you a powerful tool to grow your business. They will also be useful for your decision-making.

In order to learn more about your business, study your forecasted statements as well your old statements. Begin with categorizing your long-term goals using these statements to figure out your cash flows. Of course, forecasting your income is a must, but you will also need to forecast your balance sheet.

Then go beyond your income statement to identify milestones. You can use company milestones to offer your employees some incentive for their hard work. With these statements, you can monitor your progress, using rolling financials for each month of your year, present and future. Reviewing your progress monthly is helpful when you are working towards goals.

A financial statement is less like a rearview mirror and more like a road map for your business. For deeper insights into your business and how these statements can help, look to your left for more resources.

Using Financial Statements

Financial statements include the balance sheet, income statement, statement of cash flow and statement of retained earnings. As a business owner, you're responsible for making sure these reports get done, especially if you own an LLC or corporation or if your company is publicly traded. These reports can also help you understand where your business stands.

The balance sheet will help you figure out exactly what assets and liabilities you have. The income statement shows your net income. The statement of cash flow shows where your money is going, and the statement of retained earnings shows how much you pay out in dividends. There are a few ways to go about creating and using financial statements:

1. Download templates from the Internet if you're certain you know how to make an accurate corporate financial statement.

2. Consider buying financial statement software to help you out. These programs are easy to use and are great for owners on any budget.

3. Hire an accountant if you have no idea what you're doing. You can be sure these professionals will provide you with accurate financial reports.

Find online financial statement forms to use as templates

If you need a little bit of guidance but aren't quite sure how to create your own financial statements, there are quite a few sources of templates you can use. You can either download a template and use it as a guide to make your own statements, or you can just find one that suits your needs, fill it out and print it up.
Try: Check out the large selection of free templates available from Microsoft. Docstoc also has a nice variety. These are good if your company uses Microsoft Excel.

Take a more high-tech approach with financial statement software

If you want to use a software program to help manage your finances, look for one that has financial statements included. Many of these software programs will generate statements for you if you keep up with inputting your financial information.
Try: Compare Peachtree accounting products at Sage Software, which offers solutions for every budget. Intuit also offers great software with its QuickBooks line.

Delegate annual financial report creation to a third party

Accountants are great for keeping up your books year round, but at the end of your fiscal year, these professionals can help you immensely, especially if your business is incorporated. There is lots of paperwork to be done at the end of the year, including creating all your financial statements and submitting them to the proper places.
Try: Locate an accountant in your area using AccountantsWorld or CPAWeb.net.

If you're fairly confident in making your own financial statements but want some reassurance, take them to an accountant and have him or her perform a financial statement analysis. This will ensure that your statements are ready for investors, creditors or shareholders to view.