Whether you need to secure a small loan from a bank or are seeking investors for your corporation, you need to provide accurate financial statements for your business. At Steward Ingram & Cooper PLLC, we offer financial statement preparation to Raleigh businesses so you can access your financial data when you need it.
In addition to financial statement preparation we also offer financial statement reviews, audits, and compilation.
Business Financial Statements
There are four main financial statements you need to determine your financial health, plan for the future, and satisfy creditors, stockholders, and potential investors.
Balance Sheet
A balance sheet is an overall snapshot of your company’s financial status at a specific point in time. It is a useful tool in evaluating the overall financial health of a business. The balance sheet reports the total assets, liabilities, and equity of a business at a point in time.
Income Statement
The income statement, also called a profit and loss statement, shows exactly how much profit your business makes after subtracting from revenues, all expenses, including payroll, rent, utilities, equipment, and inventory costs. Some income statements provide a closer look at revenue and expenses, allowing the business owner to see what services or goods have a high or low profit margin and where they can possibly trim expenses to increase profitability.
Statement of Shareholder’s Equity
Equity is the net worth of the corporation, and how much each shareholder or owner would receive in the event all assets were liquidated and divided up in accordance to the percent owned in the company. The equity statement shows changes in company equity from one period to the next.
Statement of Cash Flows
The cash flow statement shows how liquid assets, such as cash is generated and used during a period of time and looks at how it flows in and out of the business. Investors and lenders often take a very close look at cash flow since they can see what kind of operating costs and financial activities are involved in the business.
Why Are Financial Statements for Businesses Important?
Whether you have a sole proprietorship or a thriving corporation, you should regularly run your financial statements or have a CPA firm generate them for you.
Understanding Financial Health
You should always have a clear understanding of your business’s financial health and know how easily you can weather a downturn in your business or whether you are ready to scale to the next level. Your financial statements show trends, such as times of high and low revenue through the year as well as your ability to come up with cash quickly in the event of an emergency. All of this information can be put to work to help you create budgets, plan for the future, and improve your operations.
Secure a Loan
When you need cash or capital for your business, you will most likely need to take out a loan, especially if you have a small business. Banks and lenders will want to see your financial statements to determine if you will be able to pay back the loan and if you are a good risk.
Reach Investors
Similar to banks, investors or potential shareholders will want to see your financial reports to understand their investment potential.
Why Choose Steward Ingram & Cooper PLLC
Since 2000, businesses in Raleigh, Durham, and surrounding areas have relied on our CPA firm to provide comprehensive accounting and bookkeeping services, including generating financial statements. By outsourcing this task to our team, you can feel confident in the accuracy of your statements and have access to a financial partner who can sit down with you and help you decipher the information and what it means for your business.
Frequently Asked Questions: Business Financial Statements
Do I Need Financial Statements?
Legally, privately owned companies are not required to disclose financial statements. However, there are three key reasons to have financial statements generated for your business:
1. Lenders require them to understand the financial health of your business.
2. They show investors and shareholders the worth of the company.
3. Provides you with in-depth data about your business so you can determine when to grow or scale back, what’s profitable and what is not, and have information ready for tax preparation.
How Often Should I Have Financial Statements Generated?
Typically, businesses generate their balance sheet, cash flow statement, and income statement at least quarterly. Some businesses may prefer to run them monthly to get a better idea of the health of their business.
How Long Should I Keep My Business’s Financial Statements?
Typically, any business document that verifies tax information should be kept for at least three years. This also helps you determine trends in your business and look for patterns that better help you plan, budget, and forecast in the future.
What Information Will I Learn from Financial Statements?
Each of the three main statements will provide you with different information:
– The income statement shows whether or not your business was profitable during a specific time period. It can also show what is increasing your profits and what factors are taking away from them.
– The balance sheet shows the net worth or equity you have in your business after all assets and liabilities are determined.
– Cash flow shows how well you can meet your financial obligations and is one of the best indicators of a business’s financial health.
Can I Run Annual Statements?
Yes. In fact, having annual financial statements gives you more information over a wider range of time, so these can be very useful. However, we wouldn’t recommend only running these statements once per year.
Can I Generate Financial Statements On My Own?
Yes. However, a CPA knows exactly how to lay out financial statements, understands what goes in them, and ensures better accuracy. They will also sit down with you and help you go through the analysis so you have greater clarity in your financial situation.