When it comes to small business accounting, most people know that it is important to keep your records updated for taxes. However, there are many more tips for small business accounting that you can use to grow, improve and expand your business.
Here are some of the important accounting reports for your small business that you should know about.
Profit and loss statement/income statement:
The most important report for any business is the profit and loss statement, also called a P&L or income statement. This report tells you how much money a business makes, as well as a lot more. A well-run bookkeeping operation includes details for where you spend and where your money comes from.
A balance sheet gives you a snapshot of what a business has and owes at any given time. For small businesses, assets typically include things like bank accounts, accounts receivables, and possibly an investment account.
Accounts receivable aging:
You don’t work for free, and your business isn’t a charity. Doing the work and sending the invoice is just part of the battle. You also have to make sure those payments get paid and collected. Your accounts receivable (A/R) aging report tells you how well you are doing on the collections side.
Revenue by customer:
Just as you should be looking at who owes you money, you should be looking at who gives you the most of it. Your revenue by customer report tells you how much you made from each customer over a period of time. Freelancers and professional service businesses rely heavily on repeat business in many industries.
Accounts payable aging:
You probably wouldn’t like it if a company took too long to pay you. Do your vendors a favor and pay them on time as well. Your A/P aging report tells you who you owe and how much.
Paying late can sour relationships and may lead to late fees and other costs. Just pay on time. You might even get an early payment discount from some vendors. That’s a big win-win!