Shownotes
Knowing your numbers and understanding your financial statements is crucial to running a profitable and growing business.
There are three financial statements that every business owner should be creating and using, or having a team member or bookkeeper create and review with them to get the full financial picture of your business.
In this episode, Sydney breaks down the 3 financial statements you need to be using in your business — plus what they look like on the personal side.
You’ll learn:
- The top 3 financial statements you need to use in your business
- The common problems business owners run into with managing each of these financial statements
- What situations you would want to use each of these statements for
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Website: https://knowyourworthpgh.com/
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Transcripts
There's a lot of terminology.
Speaker:There's a lot of workflows to go through and as a business owner, it's
Speaker:really important to understand the connections between all of these.
Speaker:Welcome to the Know Your Worth Show, where we teach you how to think about
Speaker:your money differently so that you can achieve your sexy money goals.
Speaker:I'm Sydnee your money Maven and owner of Know Your Worth.
Speaker:And I'm Kristen Sid's Dimepiece bestie team member and busy mama
Speaker:twins here to make sure that those of us without a financial degree can
Speaker:still level up with each episode.
Speaker:Let's get started on reaching your next goal.
Speaker:Welcome to the know your worth podcast.
Speaker:I am your host Sidney Smyers your money maven And I'm Kristen Fideli Sid's dime
Speaker:piece bestie, and I'm here to ask the questions that you can't ask because
Speaker:you're not here Yeah, absolutely So today is our sixth episode and we are
Speaker:going to be talking about sort of basic financial statements the basic documents
Speaker:that you would be tracking and following and preparing for your business.
Speaker:But also you can have personal financial statements for your life too.
Speaker:Okay.
Speaker:What are the important ones that we should be looking for?
Speaker:Yeah.
Speaker:So the top three financial statements that really are used in day to day business and
Speaker:just life as well are the balance sheet.
Speaker:And the income statement and the statement of cash flows in your business.
Speaker:In your personal life, you probably don't use a statement of cash flows so much.
Speaker:But you can absolutely prepare one for your personal life as well.
Speaker:But your personal financial statements are, if anyone requests those personal
Speaker:financial statements, sometimes you get those for a request as
Speaker:you of home equity line of credit.
Speaker:Or if you're opening up a financial savings account, investment account,
Speaker:working with an advisor, they might ask for personal financial statements.
Speaker:And a lot of the times that is just like the balance sheet
Speaker:is what they're asking for.
Speaker:Sometimes they might want to see a profit and loss statement for your personal
Speaker:spending for a certain period of time.
Speaker:And then for your business, so you'll have your balance sheet, your profit and loss
Speaker:statement and your statement of cash flows that you can pull and prepare at any point
Speaker:they're normally have a clean month end.
Speaker:But you can pull those at any point during your business.
Speaker:When you're saying you can pull them.
Speaker:Yes It's run the report so that you can view and evaluate so whatever
Speaker:accounting software you're using.
Speaker:So if it's QuickBooks zero But also like honey books will have them different
Speaker:point of sale softwares will also just have financial statements in them But
Speaker:you can also generate them in Excel if you're creating it yourself or if
Speaker:you're using one that like Know Your Worth makes a Excel version of financial
Speaker:statements that automatically Generate in the typical format of what you
Speaker:would see for a financial statement.
Speaker:So, any of those, when I say pulling them, it's that you're looking at a
Speaker:period of time, and certain transactions are included in that period of time,
Speaker:and basically you're generating or you're pulling those financial
Speaker:statements from whatever system you're using in order to view them okay
Speaker:and just kind of analyze from there.
Speaker:And you're speaking from a business standpoint only right now?
Speaker:A little bit of both.
Speaker:So if you're pulling your personal financial statements it's still going
Speaker:to be for a certain period of time.
Speaker:Normally the balance sheet is up through a time.
Speaker:So the balance sheet is from the beginning of time through now.
Speaker:You don't typically run a balance sheet from like the beginning of
Speaker:January to the end of January.
Speaker:That is because Your balance sheet would include your cash accounts,
Speaker:your debt accounts, any receivables or payables that you would have,
Speaker:and then other fixed assets, so buildings, cars things like that.
Speaker:So, when you're running your balance sheet, you're looking
Speaker:at it as of a certain date.
Speaker:So, on December 31st, this is what I had on my bank accounts, cash.
Speaker:This is what I had on my saving accounts, cash.
Speaker:This is what I had on my credit card, balance.
Speaker:This is what my car was worth on this on this day.
Speaker:This is what my house was worth on this day, this is what my
Speaker:mortgage looks like on this day.
Speaker:And it's all on the same day.
Speaker:So you wouldn't really run a report for What the balance is like from January 1
Speaker:to January 30th because you wouldn't get a lot of valuable information out of that's
Speaker:where you would run a statement of cash flows and it would show any changes in
Speaker:those balances from this day to this day.
Speaker:Balance is just like a snapshot.
Speaker:Yes exactly.
Speaker:Picture.
Speaker:Why would you need that just on one day?
Speaker:So the reason why that gets asked a lot on a personal level when you need personal
Speaker:financial statements is so that a creditor or a lender can evaluate the financial
Speaker:position of your life where you're at.
Speaker:So what does your debt to equity ratio look like?
Speaker:If you own a house or you own cars what does that look like?
Speaker:What's your leverage is where you would use those for a lot
Speaker:of the personal side things.
Speaker:So do you carry a lot of credit card debt?
Speaker:Do you have a lot of student loans?
Speaker:Or do you have those, but then you have really good assets
Speaker:in your house or your cars?
Speaker:Or you don't have a lot of assets, but you have a lot of cash.
Speaker:Or, You don't have a lot of any of those things, and you don't have a lot of credit
Speaker:history, but there's not a lot of risk associated with if you couldn't make the
Speaker:payments because the other payments you have are too high, or you just have more
Speaker:things that you're paying for from there.
Speaker:So the personal financial statements show assets.
Speaker:A lot of the times, too they're used in terms of what does your
Speaker:Investment capability look like.
Speaker:One of the most recent things that we were all asked to provide personal
Speaker:financial statements with was when we were working on a bid for the NWSL,
Speaker:the National Women's Soccer League all of the teams that were presenting a
Speaker:bid, the NWSL wanted personal financial statements for all of the members
Speaker:of the group to look for liability and to also look for capability.
Speaker:So they want to know generally speaking how many assets to all of
Speaker:these members of our group have.
Speaker:What does anybody's debt look like?
Speaker:Is anybody doing this where maybe they shouldn't be?
Speaker:And it could be a potential risk or do they have the capability where they
Speaker:have lots of assets under management?
Speaker:They have lots of cash in the bank account, lots of savings.
Speaker:That's where you would use those personal financial statements for.
Speaker:But they can also just be used as simple as you need to go and talk
Speaker:to your financial advisor, they want to know what you currently have.
Speaker:So you currently have student debt, car, house, bank accounts.
Speaker:And so, okay, we want to add in this savings account, we want to add in this
Speaker:investment account, and then you grow that personal financial statement with that.
Speaker:Okay, that makes sense.
Speaker:Yeah.
Speaker:Alright, so we talked so far about, What was the first one?
Speaker:The balance sheet.
Speaker:Balance sheet, and then?
Speaker:And then there's the income statement.
Speaker:The income statement.
Speaker:And then there's the statement of cash flows.
Speaker:Those are like the three main financial statements.
Speaker:Okay.
Speaker:Which one do we need to talk about more on?
Speaker:So that was the balance sheet, was what we covered there, because the personal
Speaker:financial statements, that's pretty similar to a business balance sheet.
Speaker:So that's your personal financial statements, that's
Speaker:what they're looking for.
Speaker:If you have your own business, that's where the balance
Speaker:sheet covers your assets, your liabilities, and your owner's equity.
Speaker:So the tip that they use whenever you're in Accounting 101 is ALO, so it's A L O E.
Speaker:And so your assets equal your liabilities.
Speaker:Plus your owner's equity.
Speaker:So it's a little formula that they teach in like basic accounting.
Speaker:So your cash, all of the assets that you have under your business.
Speaker:So any cars that you have, any accounts receivable that are owed
Speaker:to you Any intangible assets, if you created a software that has a value,
Speaker:that would be where that's listed.
Speaker:If you've prepaid for insurance for the year, that would be included there
Speaker:because you have that asset and it's going to, run down for the remainder of
Speaker:the year, but you have that value there.
Speaker:Your house, your cars, things like that, or buildings if it's
Speaker:in your business those are all assets on your balance sheet.
Speaker:Then your liabilities would be any money that you owe to other
Speaker:people or any debt that you carry.
Speaker:So your credit cards your notes payable to other vendors
Speaker:or individuals or businesses.
Speaker:And then if you have a line of credit, you have any loans with
Speaker:banks, those would all be held there.
Speaker:then the next piece is your owner's equity.
Speaker:So basically what's your ownership in the company?
Speaker:any money that you've made in prior years.
Speaker:Gets added into your retained earnings and
Speaker:this is going to get a little bit More specific here, so don't worry.
Speaker:Yeah, I could see your eyes glaze over a little bit And think of an
Speaker:intelligent question Don't worry
Speaker:it's a lot of things So if people ask for personal financial statements,
Speaker:or if you're trying to build some of these for your business, it is
Speaker:difficult There's a lot of terminology.
Speaker:There's a lot of workflows to go through and as a business owner, it's
Speaker:really important to understand the connections between all of these.
Speaker:But most of the time when I'm talking to the business owners about the
Speaker:connection between the statements, it's because they don't understand
Speaker:how they're paying themselves or where they're paying themselves.
Speaker:So when we run reports and you see what your tax liability
Speaker:is, they want to include more things in that than they should.
Speaker:So really their tax liability becomes a little bit higher if you don't
Speaker:understand your financial statements.
Speaker:So that's a general overview of the balance sheet.
Speaker:So if we go to the income statement now, the income statement
Speaker:is run for a period of time.
Speaker:It has a start date and an end date.
Speaker:Typically in a business it's run for the whole year, so it's
Speaker:January 1 to December 31st.
Speaker:If you have a.
Speaker:Calendar year business and you can also run it month to do a lot
Speaker:of evaluation month to month, but you can also run it week to week.
Speaker:You can run it for one day at a time.
Speaker:You can run it for the quarter to get your quarterly estimates or just
Speaker:to do oversight of your business.
Speaker:You'd use the income statement to see the inflows and the outflows of cash in your
Speaker:business that is not related to debt.
Speaker:Owners pay if you're a single member LLC.
Speaker:Or multi, but you're not an S corp and like accounts payable,
Speaker:receivable, or you're buying assets.
Speaker:Okay.
Speaker:So I know that's a lot.
Speaker:That's a lot.
Speaker:So if I break it down a little bit more and this is why you're here
Speaker:yelling at me if it's too much, like yelling at me if it's too much.
Speaker:The only thing I can think of is like just get a bookkeeper.
Speaker:Yeah, I know.
Speaker:And I don't want to stress you out more.
Speaker:I don't want to stress you out more by providing too much.
Speaker:But, or not saying it in the right way, so, so the income statement is
Speaker:where most business owners are going to be focused on a day to day basis.
Speaker:And like when you're preparing your budget for your house, you'd
Speaker:look at your income statement.
Speaker:Is this how much I make, and this is what I have?
Speaker:Exactly.
Speaker:Exactly.
Speaker:That's, so your income statement is your revenue.
Speaker:And so it's your revenue at the top, and then your expenses underneath, and
Speaker:then your net income at the bottom.
Speaker:It's in the most simplest sense.
Speaker:Okay.
Speaker:So your income is at the top.
Speaker:You can have it broken down into as many accounts as you like,
Speaker:but your income's at the top.
Speaker:And then from there, all of your expenses are listed out.
Speaker:If we were to get really in depth, there's some more like categorization
Speaker:and like sectioning that you would do for that, like cost of goods sold,
Speaker:where that's held where depreciation interest, where that's held, but we're
Speaker:not going to get super into that.
Speaker:It's truly just the money in and the money out in the simplest sense.
Speaker:Where business owners tend to get confused is that if you are, and I'm going to
Speaker:talk on behalf of the single member LLCs or the sole proprietorships or the
Speaker:hobbyists, someone that's not an S corp.
Speaker:So if you are paying yourself.
Speaker:through owner draws and just pulling money out of your business.
Speaker:You're not paying payroll taxes for yourself.
Speaker:That's like a big distinction.
Speaker:If you're an S corp or a C corp you would be as an owner.
Speaker:most of the time you'd be in payroll, at least for the companies I'm
Speaker:talking about and working with.
Speaker:If you're filing as an S corp, you're paying payroll to yourself.
Speaker:So you have your pay now listed on the income statement.
Speaker:If you are a single member LLC taxed as a sole proprietorship or a sole proprietor
Speaker:or someone that is just doing this as a contractor or a hobbyist where you don't
Speaker:have a legal business entity, you're just receiving money, but then you're tracking
Speaker:your expenses so that you can reduce that.
Speaker:You get 1099 income, this is the same way you would track it.
Speaker:Any payments to yourself that come out of your business are
Speaker:shown on the balance sheet.
Speaker:They're shown in owner's equity as an owner draw.
Speaker:So where people get confused is they're like, Well, I made 5, 000, I paid myself,
Speaker:so I only should owe the remainder.
Speaker:Okay.
Speaker:But that's not true for those sole proprietors.
Speaker:single member LLCs, they still owe the taxes on the money they've paid
Speaker:themselves throughout the year.
Speaker:So, your income doesn't get removed from your tax liability.
Speaker:In the simplest sense, you will owe taxes on any money that your business
Speaker:makes after your Taxable deductions.
Speaker:So, that would include anything that is through the normal course
Speaker:of your business, a normal and necessary expense for your business,
Speaker:you can claim as a deduction.
Speaker:So, your...
Speaker:office supplies and expenses, your computer your software.
Speaker:Exactly.
Speaker:If you have contractors that help, you include them in that deduction.
Speaker:Gas expenses, mileage, things like that.
Speaker:You can use mileage as a reduction reimbursable expenses for those
Speaker:contractors, things like that, that goes into the business.
Speaker:You would make sure that those are taken out and then you'd owe taxes on that
Speaker:net income number, the bottom number.
Speaker:But your pay...
Speaker:doesn't get taken out of that number.
Speaker:So at the end of the year, you would owe your taxes on the income
Speaker:of the business minus the expenses.
Speaker:Okay.
Speaker:Not including your payroll.
Speaker:And then if you were a business that has...
Speaker:Assets on your balance sheet a lot of times the Startup hobbyists the single
Speaker:member LLC's the people that are taking their side hustles full time a lot of
Speaker:the times we don't see them have assets.
Speaker:They might carry inventory if they're a retail business, so they'd have
Speaker:inventory on their balance sheet.
Speaker:But a lot of the time, right off the bat, you don't have a car
Speaker:that your business has bought.
Speaker:You don't have a building that your business has bought.
Speaker:You might have credit card debt and things like that, but an asset that you
Speaker:purchased and then your business owns there, a lot of times those businesses
Speaker:don't have those right away, so it's not something that I always have to
Speaker:work with those business owners on.
Speaker:But, Say you took out a loan for the business, and you received all that cash.
Speaker:That cash is not considered income.
Speaker:It would increase your cash in the bank, and it would increase your loan balance,
Speaker:which is shown on the balance sheet.
Speaker:So you wouldn't pay taxes on that dollar amount.
Speaker:Okay, and then as you're paying it back though, that's not a
Speaker:business taxable deduction either.
Speaker:It's just reducing the loan balance.
Speaker:So that's where people can get confused because they're like,
Speaker:well, I made 5, 000 in my business.
Speaker:I put a thousand dollars back into this loan.
Speaker:I paid myself 2, 000.
Speaker:So 3, 000 has now left the business.
Speaker:Yeah.
Speaker:But if they have no other expenses, their net income, would show,
Speaker:in the simplest terms, 2, 000.
Speaker:So they're like, well, why am I showing that I made 5, 000, on
Speaker:my income statement, but I only have 2, 000 left in the bank.
Speaker:And that's where the statement of cash flows would come in.
Speaker:The statement of cash flows connects where your income on your income statement
Speaker:is, that net income, and the balance in your bank, what happened to that money.
Speaker:So that's where the statement of cash flows comes in to connect.
Speaker:That's where it went on your balance sheet.
Speaker:So you paid yourself, you reduced debt, maybe you had increase in payables
Speaker:and receivables, and that would be shown on your statement of cash flows.
Speaker:Okay.
Speaker:And this is hard to follow without writing it down a lot
Speaker:of the time too or seeing them.
Speaker:No, but it's connecting.
Speaker:I can see where it connects.
Speaker:Yeah, okay, cool.
Speaker:What else do you, what other questions do you have right now on it?
Speaker:So those are the three main ones.
Speaker:Those are the three main ones, yes.
Speaker:Those are the three main ones.
Speaker:My questions, are under which situation would you need to look at these things?
Speaker:Yeah.
Speaker:Like I know you said Okay, maybe you're getting a loan for a
Speaker:house or something like that.
Speaker:What are, as a business owner, when might you need to look at all this?
Speaker:Yeah.
Speaker:So, I look at my profit and loss statement constantly because I really like looking
Speaker:at it because it really motivates me.
Speaker:So if last month my business made this, what can we make next month?
Speaker:What are we projecting?
Speaker:Are we following our budget?
Speaker:So I would recommend at a minimum on a monthly basis.
Speaker:That's very standard, very normal.
Speaker:You don't have to look at it more than that.
Speaker:But if you create a budget for yourself for the year, and you want to follow
Speaker:that, you would want to compare your budget to actual every month.
Speaker:Okay.
Speaker:And that would typically be the income statement is what you would look at.
Speaker:Okay.
Speaker:Alright, that makes sense.
Speaker:And then you'd look at it at the year end, you'd look at all of them for sure.
Speaker:Okay.
Speaker:But your year end, you'd look at your balance sheet probably to see overall.
Speaker:Where's the cash?
Speaker:You're going to look at your cash accounts very frequently.
Speaker:That's cash in, cash out.
Speaker:You're always going to be keeping an eye on that.
Speaker:But the balance sheet as a whole you would probably only really need to
Speaker:reflect on that when it's time to file it.
Speaker:So you might want to see, do you want to make an extra payment
Speaker:on your car for the business?
Speaker:Or do you want to make an extra payment on the credit card this month?
Speaker:So you might run your balance sheet to see Everything all at once.
Speaker:Where do the cash accounts at?
Speaker:What is the credit card at?
Speaker:What is the loan at here?
Speaker:And so that way you can see okay, this is how much cash we have in the bank.
Speaker:I want to allocate it to some of these accounts to reduce them in that way.
Speaker:So, that's when you might run the balance sheet.
Speaker:But you can also run it more often to see what inventory balances
Speaker:are at and things like that.
Speaker:But I would say from the businesses that I work with, they typically don't.
Speaker:Really look at the balance sheet as much other than to see maybe if
Speaker:their accounts receive if people owe them more money every month Like
Speaker:if their sales are down and there's somebody that invoices a client.
Speaker:It might be because their clients just haven't paid them yet Okay So that's
Speaker:when they'll look at that but on a monthly basis clients are very and
Speaker:myself is very on top of the income statement wanting to see Where did
Speaker:their money go throughout the month?
Speaker:What are the fluctuations?
Speaker:How much money did they make every month?
Speaker:And that's where if you're doing your personal budgeting, you would
Speaker:look at that every month too.
Speaker:You might not care so much.
Speaker:Oh, what's my car loan at right now?
Speaker:You don't need to know every month.
Speaker:Oh, my car loan went down, 300 or it's so you really aren't going to
Speaker:necessarily pull that and that's where if people are asking for personal
Speaker:financial statements You want to be able to provide it for sure, but it's not
Speaker:something that they'll ask, you know on a continual basis It's like a one
Speaker:time thing they take a good snapshot of it They see your financial snapshot
Speaker:and then you can move on from there.
Speaker:So If you're ever curious Mint, again, that budgeting app, they prepare for
Speaker:personal financial statements for you.
Speaker:So if you're using that to track, you can put in what your car is, you can
Speaker:put in what your house is, and it has the, Kelley Blue Book value of your
Speaker:car and the Zillow value of your house in there, and it'll change in the
Speaker:fluctuation, so you can run at any point in time, a personal financial statement
Speaker:and just provide that to someone.
Speaker:it's neat to look at it that way, but I would say you're looking at your income
Speaker:statement or you're looking at your personal budget on a month to month basis.
Speaker:And they're similar with that.
Speaker:So you're just like taking the pulse of your business and you could
Speaker:use it to set goals like this is where I want to go next or Oh crap,
Speaker:this isn't exactly what I wanted.
Speaker:Exactly.
Speaker:Everything to look like.
Speaker:Exactly.
Speaker:I need to work harder here or there.
Speaker:Absolutely.
Speaker:Okay, so instead of just putting it on cruise control and never looking or
Speaker:being afraid to look, it's important to print these out or run them.
Speaker:Exactly.
Speaker:Print them, run them, yeah.
Speaker:Run them.
Speaker:And analyze them either with a bookkeeper or with a partner or something like that.
Speaker:Yeah.
Speaker:Exactly.
Speaker:And so if you're creating a budget for yourself and you're going to look at it
Speaker:on an ongoing basis, it's very easy to run these reports or print these reports
Speaker:or export them to Excel and just copy and paste in if you're using the same format.
Speaker:So say you have QuickBooks and you don't have necessarily the version of
Speaker:QuickBooks that has the budget tool in it.
Speaker:So you create your budget in Excel.
Speaker:And okay, every month I want to be around, 200 on advertising.
Speaker:I want to do Google ads.
Speaker:I want to spend about 200 a month on advertising and that's my plan.
Speaker:Well, so if you would export those financial statements, your income
Speaker:statement to Excel and then you'd copy and paste in what you've spent and
Speaker:you could see, Oh wow, I spent 600 on.
Speaker:Advertising this month.
Speaker:Why?
Speaker:What happened?
Speaker:Oh, it's because this really great opportunity came up to
Speaker:get my business name out there.
Speaker:So I spent 400 extra dollars on that.
Speaker:And then you can know, okay, I did that.
Speaker:So maybe I'll reduce my ad spend next month.
Speaker:Or maybe I'll reduce my taking clients out for meals and entertainment.
Speaker:So that's where you can just check in more often if you have that prepared.
Speaker:But you'd use the income statement to, to come back and take a look at that.
Speaker:Or your budget, your personal budget for yourself as well.
Speaker:That makes sense too.
Speaker:So, what do you do for your Know Your Worth clients in regards to this?
Speaker:Yeah, so every month, as a part of Know Your Worth, we provide, so our month to
Speaker:month bookkeeping clients, we provide these statements to them every month.
Speaker:So we prepare a management report package for our clients, and every month after we
Speaker:categorize everything, we have everything in the right buckets, we've asked our
Speaker:questions we generate financial statements for our clients, where we will Basically
Speaker:use we have a third party system that helps put it in like a pretty package, too
Speaker:on our client portal where they'll open it up and it'll have a Graphic chart of like
Speaker:your income this year versus your income last year at this time Your spending this
Speaker:year versus last year and then also a snapshot of what's in your bank account
Speaker:that day Or all of your bank accounts and then the next page goes into this is your
Speaker:balance sheet for up until this date, normally this last day of the month.
Speaker:So this is your balance sheet up until this date.
Speaker:And then for the same time period, we have the income statement.
Speaker:So we do a one month income statement for them, but we also do
Speaker:a year to date income statement.
Speaker:Well I guess technically the one month income statement that we provide, we
Speaker:do that for three months in a row.
Speaker:So they have a picture of this month of spending, last month of
Speaker:spending, and the month before of spending all next to each other.
Speaker:And then the next page is the year to date.
Speaker:So they can see total income for the year, total spending for the year,
Speaker:so that way they can get a picture of this month compared to last month.
Speaker:But then if they have a goal overall, like this is a revenue number that we
Speaker:want to get to as a whole, they can look at it from that perspective too.
Speaker:So you can look at it at different time periods, too.
Speaker:So we prepare those and send them.
Speaker:And then we also prepare the statement of cash flows, which again would take
Speaker:your final net income number, at the top.
Speaker:This is what your net income was.
Speaker:This was your beginning cash balance.
Speaker:This is everything that came out on the balance sheet.
Speaker:And then this is your final cash number.
Speaker:So what that would look like is, so if you had, 1, 000 of net income.
Speaker:That would be at the top.
Speaker:If your beginning cash balance was 500, and your beginning cash balance
Speaker:was, again, 500, it would show the connection of how you made money.
Speaker:But you ended at the same number where that $1,000 went.
Speaker:Like where's the map of how you got from here to here?
Speaker:Exactly.
Speaker:So that's what the statement of cash flows does.
Speaker:So we have that we prepare as well.
Speaker:And then for some of our clients we also offer metrics that we'll
Speaker:use that just are included.
Speaker:Where we would say if you increased your advertising, we would hope
Speaker:that your sales would increase.
Speaker:It might not be immediately, but then you can see it over a
Speaker:little short couple month run.
Speaker:So if you increased your ad sales last month, we would hope you'd see
Speaker:an increase in income this month.
Speaker:So we do a kind of a comparative on like key metrics that
Speaker:some of our clients like to.
Speaker:And then we normally provide if they have accounts receivable, if they invoice
Speaker:their clients we'd prepare a, an accounts receivable report so they could see how
Speaker:many days past due certain clients are so that if they need to follow up with
Speaker:their clients, they have a good track of.
Speaker:How many outstanding receivables they have and then how they can follow up.
Speaker:Okay.
Speaker:So when you send that to your clients...
Speaker:Do you meet with all of them then?
Speaker:Sometimes, yeah.
Speaker:So we meet with some of them.
Speaker:Some of them like have a pretty good picture now, so they're just
Speaker:like looking at the same pieces.
Speaker:They'll open it.
Speaker:Okay, all looks good.
Speaker:Yep.
Speaker:We followed kind of our budget.
Speaker:And so if you follow your budget and you're prepared like for that, then that
Speaker:means you're just business as usual.
Speaker:So they can just keep going.
Speaker:And then if clients don't.
Speaker:Like What they see or they have questions.
Speaker:They can always book a meeting with us and we'll walk through it with them.
Speaker:And for most of our clients, we do that.
Speaker:They just can schedule a meeting with us and we'll talk through all of that.
Speaker:So, yeah, we do that on a month to month basis for pretty much all of our clients.
Speaker:Do you ever print them out and you're like, Oh, this is bad.
Speaker:We definitely need to meet.
Speaker:Yeah.
Speaker:Yeah, I do.
Speaker:I do.
Speaker:And I never want to be the cause of stress for clients.
Speaker:And I think a lot of the times most of our clients are really looking at
Speaker:their financial statements all the time.
Speaker:So We don't have to normally pepper anybody to look at them.
Speaker:And it's also up to them, like, how much review they want to do.
Speaker:We make ourselves available.
Speaker:But there's definitely been a couple times where we're like, Hey, just
Speaker:so you know, don't be alarmed.
Speaker:This is going to look really weird this month.
Speaker:It's because of this.
Speaker:And we try to get ahead of it with some of them.
Speaker:And there's a couple that they know if they're going to have a
Speaker:slow period, they want to make sure they're really on their spending.
Speaker:But yeah, we definitely have had a couple that were like...
Speaker:What happened this month?
Speaker:Are you guys okay?
Speaker:Do you need any more assistance?
Speaker:What can we help with?
Speaker:Just to make sure that they hit their goals as much as possible
Speaker:and we can help with that.
Speaker:I think it would be so helpful to have somebody.
Speaker:Like you, and know your worth to be like, Okay, it's spiraling out of
Speaker:control, like how do I right the ship?
Speaker:Yeah.
Speaker:Instead of just like driving it into the ground you would not.
Speaker:You would not.
Speaker:Or out of panic, I would panic drive it into the ground.
Speaker:No, you would not.
Speaker:Yeah, so I think there's a lot to be said for having...
Speaker:The professional in that instance.
Speaker:Yeah.
Speaker:Yeah.
Speaker:Really take a look at what you have going on.
Speaker:Yeah.
Speaker:It's just another level of, uh,because we've also caught
Speaker:a lot of fraud that way too.
Speaker:So we've had it where like when we're doing the categorization, we're
Speaker:looking at things and people take a look and they're like, I didn't spend
Speaker:that much money and we click in and they're like, none of that was me.
Speaker:And we're like, Oh, okay.
Speaker:And then they'll call their bank and.
Speaker:be able to sort it out that way.
Speaker:We've had that happen to quite a few clients where like their information was
Speaker:compromised and our review helped them see that and then get that money back.
Speaker:Yeah.
Speaker:Yeah.
Speaker:So it's, yeah, it's definitely helpful.
Speaker:I love looking at financial statements.
Speaker:I love it.
Speaker:I just think it's such a fun thing to be able to see like where
Speaker:you're at and I'm very competitive, competitive with myself too.
Speaker:Like I love to set.
Speaker:Parameters around what my intentions are for our businesses.
Speaker:So I think having the financial statements is just a really good picture.
Speaker:And also if you're looking at your financial statements, you know
Speaker:what you're going to owe for taxes.
Speaker:So, and you're only going to owe on taxes if you're making money.
Speaker:So, it just helps to always be looking at them so that you can always be
Speaker:prepared for how much you're going to owe and pay and just have that set aside.
Speaker:Never have that panicky I'm done for feeling.
Speaker:Exactly.
Speaker:Exactly.
Speaker:That was robust.
Speaker:If anyone wants to know more, definitely let us know.
Speaker:We can really deep dive into them way more than we even did here.
Speaker:Yeah, that was really helpful.
Speaker:Good.
Speaker:So, just to review very quickly, the top three things you want to look at.
Speaker:Or your balance sheet, your income statement, and your
Speaker:statement of cash flows.
Speaker:Yes, so a lot of the times whenever your tax accountant's asking you for things,
Speaker:if it's in your business or your personal, they're asking for that income statement.
Speaker:They definitely want to compare the balance sheet, but the income
Speaker:statement a lot of the times for the hobbyists, the sole proprietors.
Speaker:It's really all you're tracking at that point.
Speaker:If it's just passed through, they want to see that income statement every year.
Speaker:So it always helps to have all three.
Speaker:So you can get the full picture, That'd be a great place to start.
Speaker:Yeah, so if you guys have any more questions that I did not ask, you
Speaker:can email us at infoatoyourworth.
Speaker:com.
Speaker:You can drop it on our social we'll make sure that it gets answered.
Speaker:Absolutely.
Speaker:Yeah.
Speaker:Thank you very much and have a great day.
Speaker:Thank you guys.
