Financial statements can be an important part of your business operations. As a business owner you can know where you stand currently in respect of assets, liabilities, income and cash flow, as well as how well your business has done during the recently completed fiscal year. The financial statements also play an important part in the planning process of a business for launch as well as steady growth in the years to come.
Before preparation of financial statement, you should analyse all financial transactions and statements to get the full picture of your business and interrelationship with each other. All of your business financial statement, like statement of profit & loss statement, balance sheet, position statement, statement changes in owner’s equity, etc., should be made as such to establish adequate interrelationship with each other, like the sources of a company’s revenue, how the money was spent, how its assets and liabilities increased or decreased during the year in comparison with that of the past year and how cash flow was managed.
Your business financial statements should be prepared in such a way that can serve an important role in attracting potential investors and in getting a new business. If financial statements show good health of your business that can enhance the trust of the lenders in your business for providing appropriate finance for the business at times of need. Investors for your business can be attracted only after they are sure of the financial soundness of your operation. If you’re looking to start a business, lenders would want to see a business plan with projected financial statements to make themselves sure of the return on their investments.
If you are starting a business or are preparing financial statements for the first time, you can take help from a professional, like a certified public accountant (CPA) or a chartered accountant (CA) to prepare the financial statements for you.