3 Financial Reports Every Small Business Proprietor Must Diligently Review

Last Updated December 5, 2022

When any small business picks up a certain pace, it starts experiencing a greater flow of financial information. During this time, business owners need to give attention to the given financial data. If a business works with any professional bookkeeping and accounting firm, then it gets fairly easy to know what data should be reviewed with more diligence and what data sets can take a back seat.

In this post, we are going to discuss three financial reports that any small venture proprietor must regularly review in order to learn from the past, plan the present, and for better preparation of the future. The following information is corroborated with the experts of a firm deals in bookkeeping and accounting for small businesses.

1) Income Statement

In business terms, an income statement accounts for all the profits and losses an entity experiences in a certain time period. To put in simple words, a financial statement shows the profitability of a business. And it is important for any proprietor to have a constant check on the profitability of the venture to devise future plans.

Experts from seasoned tax preparation and accounting firms advise small businesses to have their income statement prepared for every month instead of going for quarterly or half-yearly windows. Income statements are also important because they are often reviewed by external stakeholders such as creditors and investors.

2) Cash Flow Accounting Statements

As the name suggests, this statement takes care of all the cash inflow and outflow that a business experience over a certain period of time. As per bookkeeping experts, this statement is different from an income statement or a balance sheet because it only accounts for cash activity (no credit and depreciation details are present there).

It is important to review cash flow statements on a regular basis because it actually tells you about the immediate liquidity capability of your business. Also, it identifies the cash sinkholes your business is suffering from.

3) Budget Variance Accounting Report

Budget variance report actually compares the actual fiscal amount that a project actually uses and the budget that was projected in the beginning. This comparative report is primarily sourced from income statements. Budget variance reports give a really clear picture regarding your recent past performance. It also lets you know the usefulness of your fiscal projections.

As you can see, all these financial reports have information that can be put to use for better decision-making. However, you will need to work with any bookkeeping firm for small businesses to get all your scrambled financial data in such a sorted manner.

Get in touch MyCount Solutions if you want to streamline the bookkeeping and accounting work of your small business.