Benefits of Financial Statements
by Molly Honcoop, CPA
Have you ever thought, “How do I know that all of my hard work is paying off?” or wondered how your business is doing? Financial statements are a great way to get a picture of how your business is doing currently and how it did in the past to help you prepare for the future.
What are Financial Statements?
Financial statements are a condensed version of all the information that you put into your accounting software (for example – QuickBooks), your ledger, or a piece of paper that you use to write down your expenses.
Having financial statements prepared provides an opportunity for your accountant to go through what you’ve done in your books to make sure that everything is in order so that anyone can understand how your business is doing. Financial statements can also help analyze specific parts of your income or expenses to provide a clear picture of what makes up your bottom line.
Who Uses Financial Statements?
You! As the owner of your business, you use financial statements to keep track of your growth or challenges over time or to get a better picture of the financial health of your company. Financial statements allow the user to see trends over time that help explain why cash seems to be tight in certain times of the year or analyze sales trends. This analysis prepares you for the future or for any big plans that are on the horizon.
Banks and other financial institutions will often ask for financial statements if you are obtaining financing for a large purchase or investment. Having financial statements available saves you time and stress when looking for loan opportunities. Financial statements also open you up to more institutions so that you have additional options of who you want to work with.
Next time you’re wondering if your books accurately show the financial health of your business or if there’s something that you could do to make sure that your business is headed in the right direction, talk to your accountant. They might just have a great way to help you get, and stay, on top of your business’s finances.
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Molly Honcoop, CPA
Molly Honcoop is a Senior Associate focused on serving businesses in the agriculture industry with their tax and financial statement needs.