There are three basic financial statements:
- Income statement (also known as P&L or profit and loss):shows whether your company is profitable, expressed by "Revenue – Expenses = Profit".
- Balance sheet:a snapshot of the company's assets (property, inventory, cash) versus its liabilities (loans, accounts payable, debt), expressed by "Assets = Liabilities + Shareholders' Equity".
- Cash flow statement: shows where the company's cash is going (to operating activities, investment activities, or financing activities) expressed by "Beginning Cash Balance + Cash Inflows – Cash Outflows = Ending Cash Balance".
Action Steps
The best contacts and resources to help you get it done
Purchase an off-the-shelf, small business accounting system
There are several software programs designed for small business accounting that run from $50 to $3000 and can do everything from payroll to inventory to printing checks. These programs will create the financial statements for you automatically based on your entries.I recommend: Quickbooks is probably the most well-known system on the market. They offer different versions including a Web option that lets you manage your finances online. Other options include Simply Accounting and Peachtree Accounting.
Do it yourself with templates from the Web for under $50
For just the basic forms, several Web companies offer inexpensive templates to download that are an easy way to get started creating your financial statements while staying on a budget.I recommend: If you're comfortable tracking your numbers in a spreadsheet and don't need sophisticated features, check out the templates available from Urgent Business Forms (balance sheet and income statement only) or Ozgrid (more features, including calculating financial ratios).
Hire a bookkeeping or accounting firm
For companies that have complex financial needs or do not have the resources to do it in-house, an outsourced bookkeeper or accountant may be the best solution.Pricing is based on transaction volume and can be cheaper than hiring a bookkeeper on staff.I recommend: TADAccounting offers a full range of services including payroll, inventory, taxes, as well overall financial reporting. Another option is Balance Your Books, which offers bookkeeping services over the Internet.
Tips & Tactics
Helpful advice for making the most of this Guide
- Create a plan at the beginning of your financial cycle for the year and compare your numbers against it on a monthly basis.
- Look at your revenues monthly and quarterly to see if your company is growing versus the previous months and quarters
- Watch your profit margins (gross profit divided by revenue) and compare this number to other similar businesses to see if you are doing as well financially as your competitors.
- As your revenue grows, operating expenses tend to grow.Calculating each of your expenses as a percentage of revenue (for example, salary expense divided by total revenue) will let you know if the expense is growing too quickly.
Financial Statements by Cougar Mountain Software
View at-a-glance data with Cougar Dtails, a Financial Dashboard in graph format. Pull financial statement reports, stating a company's health.
Finance Dashboard | CMS Pro 2010 | GL Reports | Services
www.cougarmtn.com
View at-a-glance data with Cougar Dtails, a Financial Dashboard in graph format. Pull financial statement reports, stating a company's health.
Finance Dashboard | CMS Pro 2010 | GL Reports | Services
www.cougarmtn.com
Financial Reporting Software Directory
Compare financial software using Capterra's free, comprehensive directory.
Capterra.com
Compare financial software using Capterra's free, comprehensive directory.
Capterra.com
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