You may be used to thinking of financial statements purely in terms of your annual tax return but for success in business they need to be much more than that. 

 

Understanding the basics

 

Financial statements need to be:

 

• prepared regularly.
• accurate and supported by appropriate documentation.
• the kind of relevant management information that you can use to evaluate and plan. 
• easy to understand. 

 

Successful small business operators allocate the time each month to review their financial data fully, so they clearly understand the financial health of their business and can take action if needed.

 

Your financial statements report on the health of your business. Don’t take them at face value. Analyse them alongside detailed supporting documents to see how the business is performing against your goals and adjust your strategies or your targets for the future.

 

Modern day accounting systems have made it easier to run a profit and loss and statement of financial position regularly throughout the year. A good starting point can be to run a Profit and Loss report once a month and compare it with the previous one or even the same month in the previous year. 

 

If you'd like to know how, get in touch with us and we'd be happy to show you!