Financial Reporting - Bookeepers Columbia SC
What is Financial Reporting?
Financial reporting is the presentation of the financial results of your operations. These formal records contain information that is important for stakeholders and management. The balances of all your major accounts will be summed up in a financial statement. Furthermore, disclosures will take note of important events that may not be financial in nature but impact operations.
Who Needs Financial Reporting
1. Monitoring and Control
Financial reporting helps with monitoring and controlling. Key officials of your company can be evaluated by looking at financial results. Let's take your inventory manager as an example. By looking at high inventory levels, you can make the conjecture that your business is probably overstocking.
You can also check with other business assets. If the repairs and maintenance expense is too high, you might need to consider the quality of your current working equipment.
2. Better Decisions and Planning
As you can now monitor several business areas, you can make wiser strategies to control the situation. Backed by numbers, you feel more defined as you make economic decisions. The data lays the foundations for objective and well-targeted choices.
You need financial reporting to comply with local regulations and third-party requirements. A bookkeeper knows all about local legislation, making such a person highly capable of creating compliant financial statements. Banks and other financial institutions usually require you to present financial statements upon loan processing. Your bookkeeper can get you covered in that aspect.
What are the Types of Financial Statements
1. Balance Sheet
The Statement of Financial Position, also known as Balance Sheet presents the assets, liabilities, and equity of a business. To further understand what this report contains, we have to understand what its elements are.
These are what you own and control, such as cash, inventory, and equipment.
Liabilities are what you owe to someone else. These typically arise when you accrue expenses, purchase on account, and get loans.
Equity represents your interest and ownership in a business. This is mostly all of your assets minus all your liabilities.
2. Income Statement
The Profit and Loss statement, or merely the Income Statement, present how well your business is performing financially over a period. It summarizes all of your income and expenses. By deducting payments from your income, you end up with a net income or net loss.
Income is what you earn within the reporting period, such as service revenue, sales revenue, and dividend income.
Expenses are what you incur during the reporting period. Things you spend on like salaries, rentals, and repairs are expense accounts.
3. Cash Flow Statement
If you want to know where your cash goes, check on the cash flow statements. It segregates cash inflows and outflows according to different segments of the business.
a. Operating Activities
These cash flows pertaining to the main activities of a business. Let's say you own a retail store, so sales revenue and wages for salespeople relate to operating activities.
b. Investing Activities
Whenever you purchase or sell long-term assets, you conduct investing activities. So, cash outflows from buying office space and inflows from selling old equipment are all part of investing activities.
c. Financing Activities
Financing activities involve share capital, debt, interest, and dividends. Thus cash outflows from paying debts or inflows from investors fall under this segment of the cash flow statement.
4. Statement of Retained Earnings
This report is also known as the Statement of Changes in Equity. It will contain the changes in capital accounts due to net income, net loss, withdrawal, and additional investment.
The modern business doesn’t work off the back of a cocktail napkin anymore. You’ve got digital contractors, monthly services, debt, invoices, purchases, sales, and constant cash changing hands. To understand it all you need to collate it all in a ledger that is easily understood and manageable. At Bookkeepers Columbia SC we thrive on the challenge of daily financial operations. If you want your books updated and managed we are your experts.
Whether you are looking to provide reports to potential investors or current board members or just looking for a little bedtime reading financial reports can take an extensive number of hours to produce. They can take even longer if the people producing them aren’t trained in the art of financial storytelling. Make your numbers mean something about your company and your future. Tell the story of your financial success with the help of expert bookkeepers.
How much have you spent on ink toner? Gas? Employees? Do you need to make cuts? Could you ask for a discount for bulk orders? Who wants to add up all of those receipts? Bookkeepers do. With their insight, they can keep track of your expenses and advise on how to better manage certain business actions. Empower your money by making informed decisions on what to buy and how to buy it.
Simply put, you shouldn’t have to keep focuses your attention on the daily tasks of running the back-office of your business. You should allow yourself the time and focus on thinking about the future of your business. Bookkeepers help you focus on tomorrow instead of today by managing the routine bills and invoice management so you don’t have to. When you are ready to start daydreaming again, we at Bookkeepers Columbia SC are here and at your service.
We can help you with your Bookkeeping, Expense Tracking, Tax Preparation, and More. Call 803-573-9922 today.