We love helping you save on your business taxes. Having these two statements gets us both off on the right foot when preparing those taxes accurately and efficiently.
1. Recommendation: Use QuickBooks
QuickBooks is the go-to tool for generating professional financial reports. Here are the two key report businesses produce from it:
- Income Statement (Profit & Loss): Track your revenue, expenses, and net income. It tells us how much the business made in profit, after all revenue and expenses.
- Balance Sheet: Summarize your assets, liabilities, and equity. They describe what’s in the business bank account, what it owes others, and what it owes it’s owner(s).
2. Income Statement – required for tax prep
For a visual guide, check out this YouTube video: Income Statement Example
It walks you through the format and details of an income statement that’s ready for tax prep.
3. Balance Sheet – required for tax prep for larger companies
Need help understanding a balance sheet? This YouTube video offers a concise, step-by-step example: Balance Sheet Example. 
For more information
- Balance sheet assets and liabilities are easy to understand. Equity gets harder. Candus has excellent detail on how to think about equity balances.
- Balance sheets are often not required for US businesses smaller than $250,000 in revenue, but regulations over time and US states vary. They’re an excellent tool for many businesses to keep up to date and understand, required or not.
- Learn more about creating these reports on the QuickBooks website.
While understanding these can easily be done in 8 minutes, preparing them takes longer. Managing them wisely is a key job of a business owner, so don’t rush here! Clear pricing, a solid customer base, and low expenses all show up in these scorecards.
If preparing these isn’t your cup of tea, reach out. We can take care of everything above for you, so you can do what you do best — help your own customers and team grow.
