You”ll need to get your head around your business financials if you want things accomplished. This is especially true if you’re aiming for additional funding or applying for small business loan. Financial statements give you valuable insights on the financial health of your business. Once you know more about this, you’ll understand how to manage your business better. Not only this, you’ll also increase your chances of getting more investors or getting loans approved.
Financial statements you need to know include:
Balance sheet – this contains the details of your financial position for a specific period. This sheet lists your assets like money owed, cash, machinery, stock as well as liabilities like money you owe or loans. It also contains information on your net assets or equity.
If you want a summary of your financial position, you total all your assets then subtract the total of your liabilities. This should give you your net worth.Your accountant can prepare your balance sheet once down with your tax return.
Profit and Loss – otherwise known as P&L will give you an idea on how much your business earned for a period. As the name implies, it contains your income and expenses. Get the difference between your total income and total expenses to know your profit.
Always Stay Ahead of Your Financials
The mentioned financials will let you see how your business is doing annually but, still, it’s better go have interim financial reporting to monitor things monthly or quarterly. There should be many tools at your disposal online and offline that can help you stay ahead of your financials.
Knowing where your business stands financially, gives you a good idea on whether you need additional income or funding. If you need more access to capital, then Gapcap can help you. We have made small business loans better and easier to access. Browse through our site or talk to our team.