5 Financial Statements Every Small Business Owner Needs

AKA the profit and loss statement, meant to provide an overview of your revenue. Your income statement is used to assess your company’s financial performance, identify trends, and make informed decisions.

It provides a comprehensive overview of a company’s financial health and is essential for successful business operations.

#2. Cash Flow Statement

Your cash flow statement is used to understand the inflow and outflow of cash in your business. It provides a detailed picture of a company’s cash inflows and outflows over a specific period.

Unlike the income statement and balance sheet, which focus on accounting profits and financial position, the statement of cash flows focuses on the actual cash generated or used by the business.

#3. Balance Sheet

Your balance sheet is used to assess your company’s financial health. It provides a snapshot of your company’s financial position at a specific point in time.

It outlines the company’s assets, liabilities, and equity. You can use the balance sheet to assess a company’s financial health, solvency, and liquidity.

#4. Accounts Receivable Aging

Your accounts receivable aging is used to manage customer payments. It tracks the outstanding balances owed by customers and clients.

It categorizes customer balances based on the length of time they have been unpaid, providing valuable insights into your company’s creditworthiness and potential cash flow issues.

#5. Budget vs. Actuals Report

Your budget vs. actuals report tracks your financial performance against your original forecasts (or budget). It’s an essential tool for businesses to identify areas for improvement and make informed decisions.

A budget is a financial plan that outlines expected income and expenses over a specific period. An actual financial report shows the actual income and expenses incurred during that period.

*Budgeting is a must as a creative business owner! If you need more advice regarding your bookkeeping, this post is for you.

How to Start Tracking and Reviewing Your Financial Reports

Step #1 in tracking and reviewing your financial statements: keep up-to-date and accurate bookkeeping. Your reports are pulled from your financial history and available in your bookkeeping and accounting software.

If your bookkeeping is inaccurate, your reports will be, too.

Next, set aside a specific time each month to review your reports. It needs to be after all financial information for the month has been entered into your bookkeeping system, I typically recommend picking a day during the second or third week of the month along with a time to look a your quarterly financial statements, too.

While it may feel foreign and frustrating in the beginning, keep at it! Knowing what is happening financially in your business can help you make better, more informed decisions all around!

And if you need help staying organized and on top of your bookkeeping, reach out—I’m happy to help!