Now that we can count what remains of 2020 in days and not weeks or months, it may have just dawned on you that you will need to pull together many business reports and forms to file your company’s federal and state tax returns. What exactly do you need? We hope the information below will be helpful.
Get Your Most Important Small Business Financial Reports in Order
Year-end reports for your business help you to see with a quick glance how well your business performed financially along with how it performed in other metrics. Here are the financial reports we recommend that you take the time to prepare and analyze. Remember that you can always outsource the job to Juvo Business Advisors if you simply do not have the time to do it yourself.
Cash Flow Statement
An accurate cash flow statement makes it easy for you to see and understand where your company’s money went during the year. Cash flow is the money you spend on business expenses. Obviously, you are in business to make more money than you spend. However, nearly every company regardless of size runs into cash flow problems occasionally. From unplanned emergency expenses to a loss of revenue you never anticipated, cash flow issues happen to the best of business owners.
Income (Profit and Loss) Statement
Your company income statement helps you understand where and how your business makes most of its money. By getting a good handle on your profits, you know where your business sits moving into 2021. Of course, you will likely need to make some budget changes if your company income statement does not reflect the profit margin you would like to see. On the other hand, higher than expected profit margins at the end of 2020 can make 2021 the ideal time to purchase the large business equipment you have needed for a while.
To determine your company’s current cash flow, you should first add all income and expenses. Don’t forget to include assets sold and investment activities as positive cash flow. You will also need to include money spent on loan payments. We recommend running an income statement at least once a month to have in-depth knowledge of your company’s financial dealings. Remember that an asset is anything you could quickly convert to cash within the next 12 months.
Reconcile Accounts Receivable
When a customer purchases something from your company and you extend him or her credit, that invoice becomes part of your company’s accounts receivable. The end of a calendar year is the ideal time to balance your accounts receivable and determine how much money customers really owe to your company. It is also a good idea to develop a better invoice collection policy if you run into the same problems with the same customers repeatedly.
What Are Your Business Goals for Next Year?
Remember when you first started your business and could hardly believe it the day you opened the doors for the first time and made your first sale? Your company has come a long way since then, which is always something to celebrate. Before 2020 gives way to 2021, take some time to think about how far your business has come and the goals you would still like to meet. Writing goals down with specific action points is the best way to ensure that you meet them.
Juvo Business Advisors loves to see our customers succeed. Please request a consultation with Jody today to learn how your company can be even more successful during the second year of the new decade.