As most business owners know, financial statements give a vivid picture of your business’s current financial situation.
One of the best ways to understand how you can improve your business is through financial reporting. This becomes perfectly clear once you see the purpose it serves both inside and outside of your business. As most business owners know, financial statements give a vivid picture of your business’s current financial situation. Thus, with the help of accurate financial reporting, you can stay abreast of your business’s finances. This can mean the difference between your success and failure.
1.) Provide Decision Making Tools
With the help of financial statements, you get to have great decision-making tools. For instance, they can help show business trends and tendencies. They also determine how your business is collecting money and the rates at which the creditors are being paid. Aside from that, they also show abnormalities that may potentially affect the cash flow of your business.
Another reason why you need accurate financial reports is that they can help you make informed decisions. For example, your accounts receivable reports show who is paying the business on time and paying late. You can take a look at these reports and make educated decisions on who needs more collection efforts. Therefore, your accounts payable reports will help you identify what your business owes and to whom.
2.) Get Credit with Less Hassle
Every business has needed credit at one time or another, be it for growth or stay afloat. Getting credit may consist of business loans, credit lines or credit cards. But, to get approved by a lender, they will need a guarantee that they’ll get their money back. Thus, they’ll want to check your balance sheet and credit report. Through your balance sheet, it will give them an accurate picture of the amount you already owe while also showing them the current state of your cash flow.
3.) Help with Compliance
If you want your business to avoid getting penalties or fines, you must submit your quarterly tax returns. This is because local, state and federal agencies require this as one of their tax laws and regulations. To prepare your tax returns, you will need accurate financial statements. For example, a sales report can help differentiate between taxable and nontaxable sales. Thus, allowing you calculate the sales tax you owe.
So, understanding the benefits of financial reporting is one of the best ways to encourage good records. If you need to get started with it right away, you can check out our team at Premier Professional Partners. They have skilled professional accountants in South Carlton, Australia that can help you out!
Contact us today. Call our office on 03 9347 8033 or email us at firstname.lastname@example.org