Important things to know about Small Business Financial Statements

May 17, 2023Financial Literacy

Small businesses are notoriously known to be difficult to start, and even more difficult to maintain and grow.  Therefore, it’s important to give yourself every competitive edge to ensure success.  Understanding your business’s finances can be a great tool in money management, and specifically knowing the ins and outs of your three main financial statements (income statements, balance sheets, statements of cash flow) is crucial. 

Your financial statement is one of the main indicators of your business’s past, current and to project future performance.  This information will allow you to make more informed decisions and be an important tool when approaching lenders or investors.  

Using the free *Native American Financial Services Association (NAFSA) Financial Literacy Program, you can explore online playlists with many modules that relate to overall financial competency, whether this is understanding 401(k) plans or estate planning, our curated playlists will provide you with important information.

Small Business Financial Statements:

In addition to being an important business resource for you as the owner, your financial statements will also be used to complete taxes, even if you don’t earn a profit.  Additionally, in the event of an audit, maintaining clean and concise statements will prove invaluable.  As we’ve discussed, these statements will also be necessary if your business ever seeks a loan and will certainly be reviewed by prospective investors or buyers.  

The Small Business Financial Statements module, located in the Small Business Essentials playlist details the three most common financial statements (income statements, balance sheets, statements of cash flow) as well as explaining how each one should be used by your business.   These three statements work together to provide a detailed picture of your business’s financial health.  Understanding your financial statements can help guide business decisions and better evaluate your business’s needs.  

 The NAFSA Financial Literacy Program provides a variety of modules and tools with easy-to-understand information to help people better comprehend their finances and make more informed decisions.

Explore the program today:

*The NAFSA Financial Literacy Program content contained on the NAFSA web page(s) referenced above, and on any subsequent pages created by our service providers/partners, provides general consumer information. It is not legal advice or regulatory guidance. There may be other resources that also serve your needs and you are always encouraged to, and should, consult with your own professional advisors prior to making any financial decisions.

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