Make sure your business is making a profit
To get a snapshot of your business's financial health, complete the following tasks monthly, and at the end of the financial year:
- Balance sheet
- Profit and loss statement
- Cash flow statement
1. Balance sheet
Your balance sheet reveals the financial health of your business on any given day, and will tell you what your business is worth.
Assets minus liabilities = the value of your business.
2. Profit and loss statement
Your profit and loss statement reveals your business' income and expenses over a period of time, and lets you know if your income's no longer meeting your expenses.
3. Cash flow statement
Your cash flow statement reveals what money's coming in, and what money's going out of your business – for a set time period.
Cash flow statements can provide warning signs to help you avoid future financial trouble.
Tools to help:
- Cash flow forecasting
- Financial calendar
- Identify the warning signs your business is in trouble
- Pricing for improved profit
Not sure which bookkeeping system to use?
You can choose to set up a bookkeeping system manually, electronically or use accounting software. Or hire a bookkeeper.