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Why financial reports are important

Let's say you are starting a business and have all the infrastructure you need to operate.  Why would having financial reports be an important part of your business?  Well, financials let you monitor whether or not you're operating at a profit or loss.  They also let you know whether or not you have the means to meet your financial obligations.  Another reason is they give you a sense of what your business is worth and how it's trending.

A simple way of explaining would be to open a business with $1000.  You decide on a service business and are fortunate to have all the equipment you need since you bought them over time for yourself before opening up your shop.  Being able to run a Cash Flow statement would allow you to determine where your money went for a particular operating period.  The Balance Sheet would let you know who owes you, who you owe, how much money you have, what your business owns and what your business is worth.  The Profit and Loss lets you know how your business performed over a particular period.  In other words, did you do well or not.

If you look at your financials over time, you may begin to see a trend develop and with financials, you can begin to make decisions which can position your business to grow for years to come.

I am a CPA in San Antonio and provide bookkeeping, payroll, taxes and more.  We offer a free initial visit and look forward to serving your business needs.


Richard J. Garcia | 05/27/2011