Whether you have a business in Melton, Point Cook or Tarneit, if you have professional bookkeepers with you, you can rest assured that they will keep your business running smoothly. From managing your payroll to paying your bills on time and spotting accounting errors, they handle an array of tasks. So, employing them is a necessity, especially if you want to keep your business afloat.
Among the various essential tasks that bookkeepers manage, preparing financial statements is an important one. The types of statements that they prepare include income statements, balance sheets, cash flow statements, and statements of owner’s equity. All of these are crucial to maintaining the financial health of your business.
What are the Advantages of Preparing These Financial Statements?
Professionals include various financial reports as part of bookkeeping services in Meltonand the other suburbs. The benefits of preparing these statements are:-
- You can get an idea of the current assets of your business and the debts associated
- You can identify positive or negative trends in revenue and expenses
- You can make the right choices related to scaling your business
- You can get an idea about when you can hire new staff and when should you avoid it
- You will receive numbers that can help you deal with potential investors.
Now, without further ado, let’s delve into the statements that bookkeepers prepare for your convenience.
Income Statement Preparation
An income statement is also called a profit and loss statement. It helps give you an overview of your spending along with your earnings for a particular period. The report usually comprises Revenue and Expenses. Here, your aim should be to exceed expenses since it means that you have a net profit.
You can also ask your bookkeepers to create an income statement over a certain period. It can be monthly, quarterly, or annually. You can compare your income statements from different quarters and years to understand how your business is performing. Besides, you can get an idea of the time when you incur high costs and the months when you have the most sales.
The income statement will help you manage your spending and increase your earnings. Additionally, the statement can help you identify the places where you can cut costs and generate more revenue.
Balance Sheet Preparation
A balance sheet gives the big picture of your business at a specific point in time. It outlines your total assets, liabilities, and shareholder equity on the day when the report is created.
In all bookkeeping services in Point Cook and the other suburbs, the sheet is prepared with attention to detail since it helps make essential business decisions.
You get an idea of the cash in your bank account, the properties that you own, and other physical assets that you can use to generate profit. You also get to learn about your liabilities, including outstanding vendor bills, loan balances, and debt that needs to be paid as quickly as possible. Additionally, you can get an idea of shareholder equity as well.
Balance sheets consist of two columns. One consists of current assets and the other comprises current liabilities and stakeholder equity.
Your balance sheet can also help you understand the liquidity of your business and how efficiently you can use your assets.
Cash Flow Statement
Many businesses fail due to cash flow problems. So, these statements need to be prepared carefully by bookkeepers. It helps you understand the inflow and outflow of cash and for your business.
In the statement, you will notice three sections, which are operating activities, investing activities, and financing activities. Operating cash flow involves activities related to your core business such as the sale of your goods and services. Investing cash flow includes buying and selling properties. Financing activity cash flow includes receiving cash from an investor or bank and repaying loans.
The objective of the cash flow statement is to help you determine how much cash you have in your hand to run your business. If you have opted for bookkeeping services in Tarneit, for instance, you can ask the professionals to prepare a statement whenever you think, even once a month.
Owner’s Equity Statement
The owner’s equity gives you an idea of how much you possess as the owner of the business. For instance, if your business is worth $300,000 and you owe $10,0000 in liabilities, your total equity is $20,0000. The document includes the relevant changes in the equity section of your balance sheet.
The statement outlines the beginning equity balance during a specific time period. Also, the net income and owner’s contributions are factored in. Also, the statement considers net losses that occurred due to your withdrawal. From there, you get to understand the ending equity balance.
When you have an idea of the trend of the owner’s equity, such as whether it’s up or down, you can better get an understanding of your net losses or additional debt.
Now that you have an idea of financial statements of your business, you can proceed with hiring a reputable bookkeeper.
Get Started with Hiring a Bookkeeper
To hire a bookkeeper or an accountant from Accountant Helpdesk Pty Ltd, call 03 9069 3177or email us your request to office@acchelpdesk.com.au.