One common error small business owners make is failing to create recurring month end Managerial Financial Statements. Typically you can pull your financial statement information off your tax returns at the end of the year. However, there are a few good reasons why you should consider doing an internal monthly financial statement.
Applying for a loan any time soon? As part of the application process, you’ll be required to provide your tax returns with a year-to-date financial statement. It could help speed up the loan application process by having this year-to-date financial statement readily available.
As a small business owner myself, I use the data from the internal financial statements to monitor the financial stability of my company. The data is used to generate performance ratios and trend analysis. These ratios and trend analysis’ allows me to prepare for any “dips” created by a lull in sales or spikes in expenses.
Reviewing the financial data month to month allows for a quicker clean up at the end of the year. Instead of reviewing 12 months worth of data all at once, while on a deadline to get the information to the accountant, you’ll only be reviewing one month’s data in January to close out the year.
VBO uses the month end financials as a means of watching out for errors. Was a receipt misclassified? Are there multiple “Office Expense” accounts that could be consolidated?
Preparing Managerial Financial Statements is a service that VBO can provide for your company. If you’d like to learn more about this service, call us at 845-402-0070 or e-mail us at firstname.lastname@example.org.