Running a business without regularly reviewing these three financial statements is the equivalent of driving a car blindfolded. Together, these documents give you the state of your company’s financial health. Without this information, you have no basis for making fact-based strategic decisions.
“If you review your company’s balance sheet, you can learn how much cash you have on hand, how much you owe, and how much equity you have in the business. Your annual profit and loss statement will tell you if you have made a profit and exactly how much. It will also assist you in preparing your income tax return,” explains Curtis. “Good financial statements are essential if you need additional funding for your business. Any lender will require these documents before providing additional funds.”
Setting up and maintaining your business’ balance sheet, P&L and cash flow statements is easier with the help of someone well-versed in business finance, like a SCORE mentor. A SCORE mentor will help you set up and manage these three critical financial documents so you have a clear understanding of the financial state of your business at any time. And their mentoring services are free.
When creating these basic financial documents for your business, it’s always helpful to take guidance from an outsider looking in, like a SCORE mentor. SCORE is a nonprofit organization with more than 11,000 volunteers who provide free, confidential business mentoring and training workshops to small business owners. To contact Kitsap SCORE, email email@example.com, call 360-328-1380 or visit kitsapscore.org.