For small business owners: Do you know these 3 crucial documents?

Tax preparation Sydney | W Advisory Accounting

Three Crucial Documents

Are you a small business owner? Are you sure that you know the critical things you have to know? Let me share to you 3 documents that are crucial for your business:

Profit and Loss

Your profits are measured using the net income statement.  Consult this statement to make sure you are making a profit. Profit is what you should have after you deduct your expenses from net sales. It is not enough to just know about your net sales. Calculate your business’ net income. If it is positive, then you are making a good deal

Cash-flow Statement

It is not enough to know just your net income, because even if you are making a profit you can still go bankrupt. So what can you do? Check your cash-flow statement. Remember that cash is the lifeblood of your business. Your business should have enough cash to cover the bills. Only through the cash-flow statement you can check if you have enough to cover expenses for at least 90 days.

Balance Sheet

The balance sheet is crucial to your business. It measures your assets, liabilities and owner’s equity or the net worth of your business.

Do you have these three documents? Do you understand them? Not having these three and not understanding them can probably carry far more risk of failure to your business than you know. Go and consult your accountant today!

 

Reference: http://www.entrepreneur.com/article/242348

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