Which Financial Reports Are Relevant to You?
If you track your business or personal financial data (or both), you should be analyzing this data in relevant financial reports regularly, even if it’s just for 30 minutes per month.
In my bookkeeping world, I witness clients who fall into the extreme ends of the spectrum of actually reviewing financial reports. I see some who only review a basic P&L once per year at tax time. I see others who review reports at various times of the month, for different reasons, such as to gauge ongoing sales activity or review accounts receivables and payables.
It is always important to understand which types of reporting analysis will keep you moving to the next steps toward your ultimate goals. You don’t have to process the exact same reports that someone else finds helpful. You simply need to understand that making progress toward your financial goals will require ongoing, big-picture, realistic views of your affairs that prepare you to make needed adjustments. The old adage, “the only thing that stays the same is change,” certainly applies to everyone’s financial situation.
Owning and running a business is usually very laborious, and often emotionally and financially draining. Your business can sink pretty quickly without constant updates to your books and corresponding analytical thinking.
Here are some of the more popular (and simple) small business reports that can be processed in QuickBooks:
- Profit & Loss (Income Statement) for a certain month, quarter or year.
- Profit & Loss for a certain time-period, but also in comparison to the same time-period in the previous fiscal year.
- Profit & Loss by Class: this is a standard P&L but compares different types of work you do or at different locations.
- Job Profitability Report: this will tally up all of the revenues and expenditures for one job (such as in the remodeling business) and provide your net profit for that one job.
- Balance Sheet: this is a snapshot of your business net value based on your current cash and credit status, previous net profits, and any current receivables and payables.
- Sales by Item Report for tracking products/services based on sales.
- Payroll Summary to track your total payroll expenditures, including payroll taxes and benefits.
- Accounts Receivables and Payables Aging or Open Invoices and Unpaid Bills reports.
The above stated-reports are merely just a sample of the helpful reports that can assist you. In QuickBooks, these reports are very customizable, and can be memorized for specific future usage (without having to re-customize every time).
My advice for the small business world is to keep your reporting needs simple but stay consistent. Review financial reports at least bi-weekly or monthly. Your initial needs will primarily be in the marketing realm; trying to obtain new customers while retaining a positive image for the public. As you grow into a million dollars per year in revenues firm, you will need to widen your reporting scope and develop more detailed budgets and forecasts.
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