You know money is coming in, but is your business financially healthy? Can you afford to take risks to move to the next level?
In order to know the financial health of your business, you need to look at certain reports:
Balance Sheet
The Balance Sheet will show you the balances in your accounts at a certain point in time, including your bank/credit cards, loans, and payroll liabilities.
Profit and Loss
The Profit and Loss report (Also called Income Statement) will let you know if your business is gaining or losing money through operation. It will show the money coming in minus the cost of goods sold and expenses. If the number is positive, it means you are turning a profit.
EXTRA: Statement of Cash Flows
If you want to be extra awesome, take a look at the Statement of Cash Flows. This will show if you gained or lost CASH for a certain period of time.
These reports should be viewed and taken into consideration to determine the health of your business. That is why having up-to-date books is so crucial.
Need help getting your books up-to-date?