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What Financial Statements Do Bookkeepers Prepare?

 Financial statements are an essential part of a business’s growth because through these statements, business owners can know the financial status of their business. Financial statements are the history of a business’s financial situation. These statements play an important role in bookkeeping and accounting services. Bookkeepers prepare different types of financial statements through which it can be seen how a business is performing in different areas, such as cash flow, profitability, liabilities, and assets.

Types of Financial Statements and their Purpose

Commonly, there are three types of financial statements that a bookkeeper prepares, such as:

·        Profit and loss statement

·        Balance sheet

·        Cash flow statement

These financial statements are important because they help you:

·        Reach your regulatory requirements

·        Understand and handle the success of your business

·        Plan for future growth

Bookkeepers who offer bookkeeping services in Australia are responsible to create and up to date these financial statements.

·        Profit and Loss Statements

A profit and loss statement is also referred to as an income statement. It helps you know the profitability of your company over a specific time period. It depends on your needs or bookkeepers and how often they produce this statement. Most commonly, it is generated monthly, quarterly or annually.

A profit and loss statement is helpful for taking care of business activity.

o   Being a business owner, it will help you know what area of your company is growing and where it might be facing problems.

o   For investors, a profit and loss statement will help them know the financial situation of a business before they invest in your business, or to help them see what return they can receive if they invest in your business.

·        Balance Sheets

A balance sheet contains a summary of business assets and business liabilities. It also shows how much money you would have remained if you sold your assets and paid all your debts.

·        Cash Flow Statements

With the help of a cash flow statement, you will come to know what money flows in and out of the business over a specific time period. You must have sufficient cash available to buy materials and assets and pay your debts because it is an important part of your business planning. Through cash flow statements, you can have an idea of if you are intended to have any problem in this area.
When cash flows in, it means you are receiving money from sales, but it can also be in the form of:

1. Rebates
2. Grants
3. Debt repayments
4. Selling unnecessary assets

When cash flows out of your business, then it may be in the form of:

1. Maintenance
2.  Payments to supplier
3.  Wages
4.   Bills
5.   Other business expenses

Other Reasons to Hire a Bookkeeper

Bookkeepers are experts in preparing and delivering financial statements to you. Apart from financial statements, bookkeepers and accountants can help you with various accounting bookkeeping services. The following are common reasons you need to choose a bookkeeper:

·        You are Spending Too Much Time on Business Books

If you are managing your business books on your own, then you have to spend time managing your business books. However, it can affect other parts of the business, and you may not be able to focus on a business plan. By hiring a bookkeeper, you can save time and invest your time and efforts in marketing your business, improving your work-life balance, or enhancing your services or products.

·        Overwhelming Financial Matters

Numbers can make you confused easily. Managing business finances is tough as you have to keep track of:

1. Budgets
2. Rent
3. Taxes
4. Credits and debits
5.  Payroll
6.  Invoices and accounts receivables
7.  Inventory cost
8.  Personal and business expenses

Dealing with these financial matters can make you overwhelmed, especially if you are not taking help from an expert bookkeeper. Bookkeepers are experts and trained in managing these types of transactions on your behalf. A skilled bookkeeper can help you record, interpret, and manage your financials.

·        Need Help for Future Planning

If you act as a bookkeeper of your business books, then there are higher chances that you will not have enough time to plan the future of your business. One of the primary reasons to keep a record of each transaction in your business is to understand the financial situation of your business so you can better predict future expenses and revenues of your business. An experienced bookkeeper can help you better plan for your business to help you grow. After bookkeeping, you should opt for accounting services for your business, so that accountant can proceed further to manage your business accounts and tax returns.

Summing Up

The blog shares information on financial statements prepared by a bookkeeper for your business along with possible reasons why you should take help from a bookkeeper. You can get bookkeeping services by contacting Reliable Bookkeeping Services.

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