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An extremely important tool that entrepreneurs need to learn how to read to help them make business decisions are the financial statements of the business given to them by Edmonton bookkeeping. Business owners can gain a lot of valuable insights and information about the health of their business, and what they should do to help their business based on the information in these reports. If they’re able to be proactive and review the statements regularly and use that information to make changes to their business in response to the information, they will be better able to succeed in business.

The first thing that entrepreneurs need to understand is what types of reports they should be receiving from Edmonton bookkeeping. The two most common and most important financial statements that entrepreneurs should be receiving from their bookkeeper are the balance sheet and income statement. Business owners should look at these reports first because of the value of the information in them. However, business owners may receive other reports from their bookkeeper based on their business. For example, if an entrepreneur has an extremely long list of customers in their business, they may find the aging Accounts Receivable summary very valuable. This is especially beneficial if entrepreneurs have found that the amounts that they have outstanding have been outstanding for longer than an entrepreneur is comfortable. Another report that entrepreneurs might find very beneficial to receive from ten bookkeeping is the aging accounts payable summary. This is extremely beneficial if an entrepreneur has an extremely long list of vendors, that they want to ensure they are not forgetting any invoice for.

When it comes to looking at the various financial statements given to them by Edmonton bookkeeping, entrepreneurs should look at their balance sheet first. This can be able to tell entrepreneurs what the financial position of their business is. Not only should entrepreneurs be looking at the balance sheet, but a comparative six-month statement is going to help entrepreneurs see any errors or anomalies this way. Entrepreneurs who see these anomalies on their comparative statements should ask themselves if they can explain why there might be something unusual this month. It may be because of asset purchases in their business, the seasonality of their business, or it could be an error. If an entrepreneur is not able to explain the anomaly, they should potentially see it as an error and find where that error is to fix it. Fixing errors this way can help entrepreneurs also find errors that exist on the income statement for more accurate financial statements. It is extremely difficult for entrepreneurs to be able to find errors that exist on the income statements first so therefore entrepreneurs need to look at the balance sheet as their starting place.

By learning how to read their financial statements, entrepreneurs can positively impact their business, and make plans on the best way to grow their business while fixing errors that might occur.

Entrepreneurs must learn how to read the financial statements from Edmonton bookkeeping. Intuit’s, the makers of QuickBooks did a financial literacy test of small business owners, and eighty-two of all of the participants scored less than 70% on the test. Many entrepreneurs struggle with financial literacy, so helping business owners understand their financial statements can help entrepreneurs increase their chances of succeeding in business because they will be able to look at those financial statements and make informed financial decisions in their business.

When looking at the financial statements of the business, entrepreneurs should understand that the two most important reports are the balance sheet and the income statement. Edmonton bookkeeping advises that entrepreneurs review the reports and comparative six months statements every single month. It is a lot easier for entrepreneurs to be able to see any inconsistencies when looking at the comparative statement. An entrepreneur should ask themselves if they can explain the inconsistencies for example, a business owner may have purchased a piece of equipment that can explain why the cash flow is extremely low when one month. Or perhaps, an entrepreneur can explain away saying that that was a month for three payrolls that occurred in the same month. Any entrepreneurs who pay their staff biweekly will understand that these months that have three payrolls in them happen two times every year, so they should be prepared to see that on their financial statements.

Entrepreneurs should get into the habit of looking at these balance sheets from Edmonton bookkeeping even if they have not purchased any assets in their business because it is going to help entrepreneurs understand their financial position is. The balance sheet will show all of the liquid assets of the business as well as the liabilities. Seeing the liquid assets are extremely important especially since 29% of all entrepreneurs close the doors to their business because they ran out of money. Therefore, looking at the cash flow of the business on the balance sheets can help entrepreneurs improve their cash flow.

When the way that looking at the balance sheet can help entrepreneurs improve their cash flow management is if they look at their liquid assets as well as their Accounts Receivable and discover that both are low, Edmonton bookkeeping says that that is going to indicate a future cash flow problem. This might mean that an entrepreneur should be proactive in their business to obtain financing, increase revenue or perhaps plan to contribute personal finances to the business to avoid cash flow problem.

By learning not only how to read financial statements, but use them proactively to make better financial decisions can help entrepreneurs not only avoid financial problems in their business but proactively make decisions to help increase their finances and sales in their business so that they can succeed and grow their business.