One of the most important lessons of owning a business is just how critical it is to have accurate financial statements available at any time. Without them, you may miss out on business loans and grants that could otherwise help your business. Having accurate small business financial statements means always having up-to-date tax filings, payroll records, balance sheets and profit-and-loss (P&L) statements ready at all times.
In this article, you’ll learn why accurate financial statements are essential and find resources that can help you set up and keep accurate records. If your business’s financial statements aren’t up to date, it’s not too late! Use these tips to be better prepared for whatever unknown challenges and opportunities are ahead.
Accurate small business financial statements: Why it counts for loans and relief funds
One of the most important responsibilities that you have as a business owner is to keep accurate financial records for your business. This is critical to keep your business in compliance with the IRS and state and local tax departments. With accurate financial statements, your business can quickly provide all necessary documentation to potential lenders or investors when you’re asking for funding. They’ll also be necessary if you ever want to sell your business.
During the COVID-19 pandemic, many special loan programs and grants were (and still are) available to small businesses that faced hardships. As with nearly any funding program, having accurate financial statements at the ready made it easier for businesses to qualify and greatly streamlined the application process.
If your business didn’t have accurate bookkeeping in place or didn’t file tax returns, you were at risk of missing out on essential funding during a critical time.
On the other hand, if your business did have accurate financial statements ready to go, you could act quickly, making it faster for lenders to process and approve applications.
Where to get help with financial management issues
The first step to creating accurate financial statements is to keep accurate records. Next, you’ll need to provide all income and expense information to your certified public accountant (CPA), accountant, or bookkeeper.
If your bookkeeper or accountant isn’t able to help you get the financial statements or financial relief or funding that you need, don’t leave money on the table. Instead, know that it’s okay to seek additional help. That may include finding a CPA who can help with the Employee Retention Tax Credit, a refundable tax credit of 50% of up to $10,000 in wages, per employee.
If this situation sounds like yours, find someone who can help. Ask fellow small business owners in your community or industry who they use or look up CPAs listed with your local Chamber of Commerce or Better Business Bureau.
Resources to create financial statements
If your business’s financial statements aren’t where they need to be, there are online resources that can help. You can find bookkeeping software that makes it easier to generate accurate financial statements for your business, as well as free spreadsheet templates available for programs like Microsoft Excel. Software like FreshBooks and QuickBooks have low monthly and annual subscriptions available and can help you keep accurate books.
Additional resources from Pursuit
If you need more support, explore the resources below from Pursuit that can get you started:
- The ultimate guide to business growth outlines several steps that can help you better organize and manage your financials, with links to key resources.
- Get familiar with bookkeeping basics to understand the fundamentals of business bookkeeping. When you’re ready to improve your bookkeeping skills, explore this guide to take it to the next level.
- Is your business accountant growing with your business? Here’s what you need to know to determine if your current accountant, bookkeeper or tax preparer is still the best option for your business.
- Review the basics on creating a profit-and-loss (P&L) statement, a balance sheet and cash-flow projections.
- Learn about the differences between interim financial statements and annual statements with information about how to create and use them.
Prepare now for the unknown: Pursuit can help
Pursuit offers access to more than 15 loan programs ranging from $10,000 to $5.5 million. With affordable payment terms and flexible uses, we’ve helped thousands of business owners grow and thrive in good times and get through tough times, too. Many Pursuit clients are eligible for no-cost consulting and mentoring that can help with business-ownership challenges like financial management, marketing, human resources, and more.
Remember, you never know when your business will need emergency funding, so it’s best to always be prepared. Check the accuracy of your financial statements, get them corrected or updated, and then contact us today to learn more about how we can help. You can also visit our comprehensive COVID-19 resources page to learn more about pandemic-related loan and grant programs that may still be available.