Financial Statements

Financial statement preparation is the heart of accounting.  It is the process of taking all sources of your cash flow and organizing them in a way that makes sense. A clear and precise statement will make it easier to do the following:

  • Identify areas of overspending

  • Identify areas of underspending

  • Budget

  • Related tax preparation services

  • Prove financial responsibility

Your statements provide a comprehensive collection of your current financial performance.

Sota Bookkeeping will put all your necessary statements together, and you will experience peace of mind knowing that your statements are done right.

Income Statement

Also known as a profit and loss statement, the income statement provides a list

of all your revenues and subtracts an itemized lists of all your expenses, resulting

in your net profit (or loss).

With an income statement, you can:

  1. Track revenues and expenses so that you can determine the operating performance of your business

  2. Determine what areas of your business are over/under budget

  3. Identify specific items that are causing unexpected expenditures (phone, bank charges, monthly subscriptions, office supplies, etc.)

  4. Track dramatic changes in your expenses as a percentage of sales

  5. Determine your income tax liability

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Balance Sheet

A balance sheet gives you a snapshot of your business'

financial condition at a specific moment in time.

With a balance sheet, you can:

  1. Quickly get a handle on the financial strength and capabilities of your business

  2. Identify and analyze trends, particularly in the area of receivables and payables. For example, you may be collecting payments from customers more slowly than you were previously

  3. Determine if your business is in a position to expand

  4. Determine if your business can easily handle the normal financial ebbs and flows of revenues and expenses

 

The balance sheet, along with the income statement, is essential when providing financials to potential lenders such as banks, investors, and vendors who are considering how much credit to grant you.

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Cash Flow Statement

Arguably the most important financial statement, the cash flow statement describes

your sources of cash and how that cash was spent.  This makes it useful for determining

the short-term viability of a company, particularly its ability to pay bills.

It is perfectly possible for a company that is shown to be profitable according to

accounting standards to go under if there isn't enough cash on hand to pay bills.

Unlike the many ways in which reported earnings can be presented, there is little that can be done to manipulate your cash situation. Barring any outright fraud, the cash flow statement tells the whole story. The company either has cash or it does not. Analysts will look closely at the cash flow statement of any company in order to understand its overall health. 

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Custom Reports

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