Why You May Need Help Compiling Your Financial Statements
Do you need help compiling your financial statements? If it is the first time that you have to compile your financial statements, you will benefit from the basic guidelines and introduction regarding core components below.
Profit & Loss Statement
Mostly referred to as the income statement, it is the part of reporting that deals with the financial results for a particular period. You can consider it as a type of daily reporting of the operations over the last year. The statement is important, because it shows the profits and losses related to the provision of services or products and the expenses associated with such. The statement consists of the:
It is the part of reporting that deals with your company’s financial position at a particular date such as January 2016 and details the assets that you have available to operate as well as your liabilities against these assets. The important parts include:
Further components to include:
With it no longer being a requirement for smaller companies to submit audited financial statements, the risk of inaccuracies in reporting has increased. Understanding exactly which elements to include and regularly creating the balance sheet, and profit and losses statement can be a time consuming and often frustrating process. As such, more and more small to medium size companies prefer to outsource the function to experts. This helps them to ensure a high level of accuracy, objective reporting and compliance with reporting standards.
Key benefits of outsourcing the function include:
Many South African companies now also outsource their tax functions in addition to accounting, and payroll. With franchise groups such as The Tax Shop offering superb training, standardised procedures and affordable pricing, it is possible to have the function allocated to an outsourced party while being able to focus on growing the business and staying competitive.
The balance sheet and income statement should be prepared on an annual basis to help you make informed decisions about the direction of your company. With the complexity of the financial statements you may very well need help in compiling your financial statements to accurately reflect the above. Making use of experts such as the accountants from The Tax Shop will save you time and frustration.