Financial Statement Preparation
in Raleigh

There are four primary financial statements generally used in small business accounting: the balance sheet, the income statement, the cash flow statement, and the statement of shareholder equity.

• The balance sheet provides a snapshot of a company’s assets, liabilities, and shareholder equity at a particular point in time.
• The income statement shows a company’s revenue and expenses over a period of time, typically one year.
• The cash flow statement tracks the inflows and outflows of cash within a company over a set period.
• The statement of shareholder equity shows the total equity held by shareholders at a given point in time.

Which of these matter most for your business can depend on your entity type, size, and whether you’re preparing them for internal use, lenders, or investors.

Financial statements can provide valuable insight into a company’s past and present financial health. They’re often useful for winning over potential investors, satisfying creditors, and supporting tax and regulatory compliance, and they can help inform decisions around resource allocation. Requirements can vary depending on your entity type, financing arrangements, and whether outside parties like lenders or investors require them. C.E. Thorn, CPA, PLLC prepares financial statements aimed at accuracy and current compliance standards for small businesses in the Raleigh area. Call 919-420-0092 to talk through what may be appropriate for your business.

For many small businesses, the balance sheet and the income statement are generally the two financial statements worth focusing on first for accounting purposes. A balance sheet is a summary of financial balances, including assets, liabilities, and shareholders’ equity, at a specific point in time. An income statement shows revenues and expenses over a set period, such as a quarter or fiscal year, and reflects profit or loss during that time. Together, they can offer a more complete picture of a business’s financial health than either one alone.

A balance sheet isn’t generally required to operate a small business, but it’s often recommended. It showcases a company’s assets, liabilities, and equity at a specific point in time, which can offer insight into whether a business is currently operating at a profit or loss and whether it has the resources to expand or pay down debt. Lenders and investors may also request one as part of their own decision-making process.

These generally represent different levels of assurance a CPA can provide on a set of financial statements. A compilation involves organizing financial data into statement form without providing assurance on its accuracy. A review involves some analytical procedures and inquiries, offering limited assurance. An audit is the most extensive level, involving testing and verification aimed at providing reasonable assurance the statements are free of material misstatement. Which level may be appropriate for your business often depends on lender, investor, or bonding requirements, so it’s generally worth confirming what’s being requested before choosing a service level.

This can depend on the size of your business and how actively you’re using the statements to make decisions. Many small businesses find that monthly or quarterly financial statements help them track trends and catch issues early, while others may only prepare them annually to support tax filing. A CPA can help you determine a schedule that may be appropriate for your specific situation.

Financial statements can help a company make decisions about where to allocate resources and can provide information potential investors may use to decide whether to invest in the company. They’re also often relevant to lenders, credit companies, employees, and shareholders, since each of these groups may rely on them for a different purpose, from assessing creditworthiness to evaluating overall financial health.