Knowledge of finance and accounting can be critical to the success of your business. As a small business owner, you need to be able to manage your company’s finances. Hiring a good accountant to handle your business’s bookkeeping and accounting can make all the difference by keeping you organized, accurate and up to date. This will also save you time, and in turn, save you money by saving you time. It is very important for small business owners to know small business accounting reports and statements. Below are the most important accounting reports and statements:
Annual Financial Reports:
This report is generally prepared each year by your accountant and is an important requirement for your annual tax return.
Business Activity Statements (BAS) – GST Preparation:
BAS stands for Business Activity Statement. This statement is issued by your accountant on a monthly or quarterly basis, depending on the transactions of your business. BAS is a form that all businesses file with the Australian Taxation Office to report their tax liability. It is used to record your company’s debits and credits. Each activity statement carries a unique document identification number (DIN). Activity statements can be submitted to the ATO on paper (by mail), by telephone, electronically (Electronic Lodgment System or “ELS”), or through the business portal (via a tax agent). Small Business Activity Statement, is important for the annual tax return. BAS Agent Services in Australia
Balance Sheet (Statement of Financial Position):
This statement is also prepared annually by your accountant and includes all of your current assets, long-term assets, current liabilities, and long-term liabilities. A balance sheet is often described as a snapshot of a company’s financial position. The major categories of assets are usually listed first, followed by liabilities. The difference between the assets and liabilities is called the equity or net worth of the company, and net worth must equal assets minus liabilities.
Profit and Loss Statement (Income Statement):
This statement is also prepared annually or quarterly by your accountant. It includes all business income minus all business expenses.
The accounting statement may also include a financial analysis of your business performance and a cash flow report.
Cash Flow Report:
This report can be prepared annually or quarterly and includes your company’s cash inflows and outflows. It is usually measured during a specific, limited time period. Cash flow is a general term that is used differently depending on the context. It can be defined by users for their own purposes. It can refer to actual flows in the past or projected flows in the future.
These are the main disclosures used in the preparation of small business accounts. It is very important to know each statement as it is important to your business. I recommend small business owners take a small business course that covers small business management including accounting and finance.
Also Check: Small Business Bookkeeping Services
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