Important Financial Statements for SMBS

Any business owner in the game to make a profit and earn some money (unless it’s non-profit entity). There’s so much more to managing a business than just having a fancy little next to your name. Knowing where your business is standing from financial viewpoint can never be overstated. You can only know this if there are solid financial reporting and analysis methods in place. Therefore, learning which financial statement are important is essential to success. Here, we take a look at the necessary statements that you need to know all about.

Bank reconciliation statement
Managing your business’ checking account every month keeps you updated on how to maintain your bank account and taxes. In addition to this, businesses can point out any and every unauthorized transaction, lost deposits or checks. Preventing the business from incurring unwanted losses, bank reconciliation allows owners to keep an eye on the financial health of the company and ensure no funds are being falsely utilized.

Income statement
This is probably the financial statement you look at the most. The income statement helps you track expenses and revenue, which provides an indication of how the business is performing. A thorough look at the income statement will offer insight into which department is operating under-budget or over-budget. Businesses can track individual items that can result in unexpected expenses such as office supplies, utility bills, phone or mail.

Balance Sheet
Any business owner who wants to know the financial state of the company at any given time needs to look no further than the balance sheet. It allows quick decision making based on accurate data and ensure all contingencies are taken into account to avoid a crisis or emergency. The balance sheet provides a holistic view of payables and receivables. Owners can also figure out if the business is ready to expand or continue in the same vein.

General Ledger
Consider the general as the bond that hold your business’ financial records together. This is the most important statement for any business and its owner. Every transaction that takes place goes through this statement. Any issue in the general ledger will disrupt every statement. Reviewing the general ledger can help identify discrepancies and keep the business and its books in optimal shape.

Conclusion
The two most basic and essential elements in providing financial reporting are balance sheets and income statements. Potential lenders, such as banks, investors and vendors, are always looking at the financial reporting of a business when considering how much credit to grant them.