A financial statement can take many forms.

The first question to ask is whether the financial statement is for personal or business use. Individuals often have to prepare personal financial statements if they are looking to obtain credit, usually for a large purchase such as a vehicle or home. Often the lender will have a preprinted form that the individual will simply fill out with the necessary information, such as their checking and savings amounts, investments or real estate and their debts, such as credit card balances, car loans and mortgages. This financial statement is only required when needed. 

Businesses prepare financial statements in a somewhat similar fashion but the information is much more detailed, prepared on a periodic basis rather than when needed and can contain information that is useful to both an outside party or the owner or management of the business itself. Here we will focus on the need of a business to prepare a financial statement and how it is prepared.

Your business may need internal controls. Internal controls are the policies and procedures a business takes to safeguard its assets.

A key to running a profitable business is to make sure that the assets, especially cash, are protected. Assets are the lifeblood of any business large or small. They represent the items owned by the business that lead to the production of income. If they are left unprotected, then the profitability of the business is limited or in jeopardy. 

At some point in time, a business owner has to decide whether to seek help in growing their business.  They are going to need employees or independent contractors or both for the business to grow. An employee is hired by a business to perform a specific task or tasks. So is a contractor. The difference depends on several factors, but the reason is specific.  

Taking the home office deduction can be complex and vary between individual small businesses. For more information on whether you should take the home office deduction, please consult with your licensed CPA.

Many small businesses are based at home. There are numerous stories about large and successful businesses getting their start around the kitchen table or in a garage. The reason for this is primarily financial – the business owner doesn’t have to pay rent for often expensive office space, especially if much of the work can be done at home. Working from home is both popular and necessary these days and there can be some tax benefits available under the right circumstances.  

On March 25, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. A summary of the provisions of the law can be found here.

In the business world, several terms relate to the financial affairs and functions of a company. The most common are Certified Public Accountant, Chief Financial Officer and Controller. Depending on the entity, this could be one person or three different individuals. The essential difference between these three individuals, however, is CPA is professional designation and the CFO and Controller are job titles.

Managing cash flow in a small business is crucial to its success. Cash flow management includes techniques for collecting cash, budgeting to plan for cash needs, utilizing outside sources such as banks or investors to supplement cash needs, and even legally minimizing business tax liabilities. Techniques for dealing with these functions can range from the simple to the complex, depending on the nature of the business. 

However, one of the most basic ideas is to understand the difference between profit and cash flow.

If you own a small business or are thinking about starting one, the question of business planning usually comes up. Yet, most small businesses rarely have a written business plan in place at any time during their existence. So do you need a business plan?

Congress recently passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act. There are provisions in this 335-page bill that affect just about all Americans, both individuals, and businesses. There has been much information and speculation as to what is in the bill and this article will attempt to shed some light on the more important items that affect small businesses. 

The CARES Act is an example of the difference between a new law and what really happens.

At some point in their existence, a small business may face the decision about whether to hire a Controller. The timing of this will vary widely among businesses depending on their size, projected future growth, current staffing, and organization of the firm’s accounting function. It will also depend on what the business owner or management expects a Controller to do and what they can afford to pay for that position.