How many times have you received your financial statements from your accountant and you’re not sure what to do with them? Maybe you put them in the bottom drawer to look at it another time. There's actually some really useful information included in these. Business owners will look at the profit and loss to see how they've done for the year but don't really understand what the balance sheet does. This gives you some insight into your business. It shows you the net worth of the business so if you do a comparison between the years, you can see if your business is increasing in value or decreasing.
A balance sheets made up of three components: There's your Assets. These are things that you own like your computer equipment and your plant equipment. Then there's the Liabilities. These are the things that you own. This will include your bank overdraft your credit cards or any loans on your equipment. The third piece is the Net Equity, and this is the difference between your assets less your Liabilities gives you your Net Equity and this is your contribution to the business and the worth of the business. So, it can help you with determining how you're going to grow your business and where you're sitting at the moment. Give us a call if you need any information. We can give you a lot more detail. Owning a small business is an exciting challenge. However, it is easy to get sucked into living day to day and lose direction. By focusing on the 5 main areas of business growth you can grow a business that will allow you to live the life you want. So if you feel like your business is growing faster than you can keep up, email [email protected] to organise a free chat
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AuthorLynne Spalding, founder of FCS, spent more than 20 years working in an Accounting practice before founding Financial Controlling Services in 2002. She brings more than 35 years of experience in accounting to each client. Categories |