Do Small Businesses Need Financial Reports?

Are financial reports only for large companies? The answer is no. All businesses, both large and small, still need financial reports to make it easier for business actors to find out their profits and losses.

Small business is a small-scale business. Expenditures and incomes that occur in small businesses do not reach very large amounts like large companies, but in this case it does not mean that small businesses do not need to make financial reports.

Small business financial reports don’t have to be complicated, because basically making financial reports is very easy if you know and understand how. Even if you only have a small business, don’t think that making financial statements will make no difference to your activities in the financial cycle.

In doing business, you need to record all types of transactions in your business cash book. At least every business actor should have a financial report like this to find out whether the business being run is successful or even experiencing losses. Your main goal in doing business is to make a profit, right? So you have to make sure the capital that comes out will not be in vain when used for small businesses.

Important Things in Small Business Financial Statements

In making a small business financial report, several things that you must record in detail are expenditure and income transactions, besides that profit and loss must also be considered. The function of financial statements in your business is to let you know the circulation of money that occurs in this business is healthy or not.

Small business financial reports can be created and grouped to make it easier for you to check all transactions in the business. It’s better not to mix one type of transaction with other transactions in one book, make several books for the disbursement cash book, cash income, inventory or stock book, as well as the main cash book.

The main cash book is a combination of all transactions that you have recorded so far, its purpose is to find out the graph of the profits and losses of the business that you have. From the main cash book, you can find out whether your current profit is greater than the previous period or not.

Also provide a book to record business operating costs and other expenses. Store operational costs must be reduced so as not to incur a lot of costs, operational costs such as electricity, water, and taxes. You can reduce expenses by saving on water and electricity usage where you do business. If you have debt while doing business, you must also record it, then budget from the profit you get to pay off the debt.

That is the importance of making small business financial reports. Don’t underestimate the function of financial reports when you run a business, whether it’s a small business with your colleagues or a business that you do yourself at home.

How to Make Financial Reports for small businesses

Even though it is still in a small-scale classification, companies should not neglect the preparation of financial statements. Most of them only see big turnover and don’t care about the actual money flow process. In fact, making simple financial reports is quite easy. Here’s an easy way to make simple financial reports for small companies

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1. Create an Expenditure Log

When starting a business, you should first consider making a separate book specifically for recording expenses. Record all expenses from purchasing goods to spending a number of costs clearly. This way it will be easier to find out how much business capital has been issued.

2. Create an Incoming Logbook

Not only expenses, all things related to money income also need to be recorded clearly. Including the proceeds from the sale of goods to accounts receivable that have been paid. Try to record this income every day. This makes it easier to make monthly reports.

3. Create a Master Cashbook

This main cash book is a combination of income and expenditure log books. This merger is intended to find out in more detail how much the company’s losses and profits are. In addition, making this main cash book can also be used as a basis for making future corporate strategic planning.

4. Stock Book

Companies do not only record money matters but also goods. The recording of the flow of goods in and out must be carried out continuously and every day. Logically, if sales are high, the flow of goods coming in and out should also be higher.

This stock book can also be used to monitor the amount of inventory the company has. In addition, this book is also useful for avoiding fraud that is sometimes carried out by suppliers or employees of the company itself.

5. Goods Inventory Book

This book is used to record all the goods owned by the company. Both purchased and taken care of. In addition, this book can also function to keep company assets under control.

What is needed in making simple financial reports for MSMEs?

To make financial statements, as described at the beginning of the paragraph, you must prepare several books of financial transaction records, including:
– Cash book
– Goods Inventory Book
– Goods Purchase Book
– Sales Book
– Fee Book
– Accounts Receivable Book
– Accounts Payable

Where do the data sources come from to make financial reports?

Sources of data used to make financial statements are receipts or notes of sale and purchase. Receipts or notes are used for the number of items sold. With the receipt can be used as evidence.

Why does every business need to make financial reports?

Every type of business or company uses financial statements to see how the company’s condition is during a certain period. The data sources are processed to become clear and detailed financial reports. Every recorded transaction data will be proof of the validity of transactions in the business for a certain period.

Conclusion

That was an explanation of how to make a small-scale company financial report. It also explains about examples of simple financial statements. Some examples of simple financial statements above can be a reference for small companies who are still confused about the correct preparation.

To make it easier for you to make all the financial reports above, you can use accounting software that is easy to use and at an affordable price that is suitable for MSMEs, such as Accurate Online.