Preparing Financial Statements for the Small Business Owner
Preparing Financial Statements for the Small Business Owner
CPA Serving Atlanta GA & Beyond
Today’s small business owner is bombarded daily and hourly with decisions, which are critical to both their short and long term success. Having a set of internal financial statements an entrepreneur can use and rely on, is their best first step in having at their ready disposal accurate and insightful management information. This will help with decisions ranging from when to set up additional lines of credit, hiring and staffing decisions, purchase vs. leasing analysis, job costing and financing decisions of all sorts. Well-organized financial statements allow a business owner at a glance to see their available cash balances, accounts receivable and payable balances, current assets vs. current liabilities and a company’s net book value.
Key management information is an essential and critical component of making good business decisions. Utilization of a Certified Public Accountant is a wise call for an owner to make to develop a set of meaningful “management friendly” financials. The first task is to have a well-laid out and organized chart of accounts that the CPA/owner can use to track all of the company’s assets, liabilities, equity, revenue, cost of goods sold and administrative expenses. Having enough charts of accounts to both run the business as well as to prepare the year-end corporate income tax return is essential. However, equally as important is in not having any more charts of accounts than are necessary, which will otherwise clutter and confuse its reader.
After your CPA has helped you set up the chart of accounts and taught you some of the finer points of Bookkeeping 101, then you can turn your attention to setting up a Management Reporting System where monthly reports can be prepared. This will help an owner go beyond the financial data to discover key operating data such as a job costing program to track revenue and cost by individual job, invoice or client. By reducing business variables to the lowest common denominator, business entrepreneurs are able to gain a good understanding of the many cause and effect relationships of their decisions. By costing jobs individually by both dollars of revenue, cost and profit by job in both dollars and percent, the financial veil is lifted allowing any necessary corrective operating decisions to be made. A good management reporting system will also include key operating statistics, which can be utilized for cash flow forecasts, short and long term planning, and to discover trends before they become problematic. To help you along your way you will find on our web site many more articles you can use to help you along the way to discover how to use company financials to your best advantage.
Utilizing Financials as a Management Tool
Managing the Heart Beat of your Business
Unlock the secrets of your business by learning to check its pulse by a review of your company’s internal financial information.
Using the Profit and Loss Statement to Determine the Value of Your Business
While the balance sheet shows what a business is worth, the profit and loss statement, properly analyzed, shows a company’s growth rate and rate of return, and points to its future viability.
Audits, Review & Compilations
There are three different levels of independent attestation services your outside CPA may provide for you. This section will provide you with a basic understanding of each, thereby providing a good reference point for selecting the level of service that is right for your business.
Using Cash Flow Forecasts to Improve Business Decision Making
Many cash/acquisition decisions when made in with little or no information appear prudent until it is too late. Beginning with the basis of Cash Flow 101 a business owner can learn how to best make larger financial decisions with prudence and foresight.
Your Business Credit
Knowing your business and its key operational statistics and ratios will be of prime importance as you plot your company’s short and long term profitability.
Written by John Dillard CPA of His CPA at 770 814 9304 and visit www.hiscpa.com (an Atlanta Christian CPA firm). At His CPA we march to the beat of a higher drummer where we put the “Golden Rule” to work each and every day by “Serving Him by Serving You…One Tax Return at a Time.”
We advise clients on: IRS representation, Offer in Compromise, Tax Problems, Incorporation in Georgia, Corporate and Personal Income Tax Returns, Part-time CFO, Virtual Controller, Business Planning, Payroll Administration, Bookkeeping.
We serve clients that are located in Atlanta GA, Gwinnett County, North Fulton County, Cherokee County, DeKalb County, Hall County, Clayton County, Cobb County, Forsyth County, Hart County, Jefferson County, Duluth, Alpharetta, Johns Creek, Lawrenceville, Marietta, Milton, Norcross, Snellville, Roswell, Buford, Smyrna, Marietta, Cumming, Grayson, Hartwell, Suwanee, Sugar Hill, Loganville, Lilburn, East Point, Gainesville, Snellville, Buckhead, Buford, Peachtree City, Dunwoody, Kennesaw, Decatur, Conyers, Stone Mountain and Decatur, Barrow, Bartow, Carroll, Cherokee, Clayton, Coweta, Douglas, Fayette, Forsyth, Fulton, Gwinnett, Henry, Newton, Paulding, Pickens, Rockdale, Walton, Barrow, Bartow, Carroll, Henry, Newton, Bartow, Walton, Rockdale, Barrow, Spalding, Coweta, Dawson, Douglas, Fayette, Newton, Paulding, Spalding, Walton, Henry, Paulding, Douglas, Coweta, Canton, Covington, Douglasville, Druid Hills, East Point, Forest Park, Griffin, Lithonia, Mableton, McDonough, Milton, Mountain Park, Newnan, Powder Springs, Stockbridge, Union City, Villa Rica, Winder, Woodstock
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