What financial reports should I review? For most small businesses a Profit & Loss and Balance Sheet are key to review at year-endand all year long. Accounts Receivable & Accounts Payable reports are also vital to managing cash flow.
Why is this important? Reviewing these reports in late November to early December will help you get an idea of where the company will end the year. You should scan these reports and address questionable balances or activity. Don’t be afraid to ask your bookkeeper for more detail to help you understand the balances.
Tip: Ask your bookkeeper to provide a “Profit & Loss by Month”. This will allow you to view each month side-by-side to compare month-over-month income and expenses.
For What Purpose? Once you’ve had the chance to review your financials, you’ve worked out the kinks with your bookkeeper and made any final adjustments, you’ll want to send your YTD (year to date) Profit and Loss (Income statement) and your Balance sheet to your CPA for a proactive review. This will allow your CPA the opportunity to make some final suggestions on any financial activities you should consider before the year is over.
Tip: Don’t wait until the end of the month to do this. In order to for this year-end practice to be effective and to allow your CPA an opportunity to review and advise, you really want to get working on this by the end of November.