One of the most critical aspects of small business accounting is that of financial information. Financial reports are documents and folders that you put together to regularly monitor and examine how much money your business makes.
The financial statements are very important and useful to a small business owner. They show the health and value of your business (balance sheet) and how much profit is undertaken (income statement).
Small business bookkeeping performs the analysis of financial statements to see where the business is, where it has been, and where it should go. The financial statements show what is happening with a company.
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You could say it is the dashboard by which you measure your business. This is not a new tool; in fact, it can be traced back to the 15th century with the invention of double-entry bookkeeping. All you need to know about your business, you can determine by analyzing financial statements.
Another reason why a small practice of accounting firms could insist on the financial statements is that it is intended. If your company is still in a position where they need financial assistance to apply for a loan or line of credit, your lender has to wait to see your financial statements.
This also applies if you are looking for partners or investors. And we will not forget our responsibility statement tax or government. Financial statements are often due when you file your tax returns.