Happy New Year! Congratulations on making it through another crazy, COVID-influenced year!
Perhaps this January, it’s more important than ever to get your finances in shape. You don’t know what the new year holds, but you can take a look at your numbers from last year and glean valuable information that can help you prepare for the year ahead.
Start by checking out our post from last January for some important clean-up tips.
Once you have your numbers accurate, take a few minutes to look at some of them in depth!
We recommend the following:
When you look at the profit and loss statement, don’t just look at revenue…check out your expenses. Where is your money going?
Are your ratios of expenses to income reasonable? How did the change in revenue compare to the change in expenses from the year before?
Look at your balance sheet. What is your cash balance? Do you have enough cash to fund your needs for the next few months? Do you have enough to pay estimated taxes in January and April, as well as any taxes due in April? Are you saving for future large purchases?
What other assets do you have? What about liabilities (debt)? Can you pay this debt down faster? Is your total equity positive or negative? If it’s negative - in simple terms - you’ve either been pulling more money out of the company than you make or you’re not making enough money.
Moving forward, are there any expenses you can cut this year? If you are looking to grow revenue, what expenses will increase? What’s your cash balance and flow like? What can you do to improve it this year? Can you pay this debt down faster? Is your business making a profit?
There is always a lot of information in your financial statements, but sometimes you need help understanding it. Need help with your numbers? Reach out to us today!
