Beginning/past financial statements are the next section to have, as this outlines the current and past financials as well as forecasting the future. For some free templates on the main financial statements that we will be discussing, you can visit the BDC.

• The first statement that you should consider is your Income Statement, this statement outlines and describes your past reporting periods total revenues and expenses and is a great way to explore what costs might be too high and help with determining your current profitability as a business. To learn more about income statements HubSpot provides a great breakdown of Income Statements.

• The next important financials you should include is your Balance Sheet, which showcases your Assets or what your company currently owns, as well as lists all the debts that you have as well as the total amount of equity you hold in the firm as well in the forms of shares outstanding (if you are incorporated) and retained earnings. The Beginner’s Guide to Balance Sheets (hubspot.com) is a great resource for learning more about the balance sheet.

• The Cashflow Statement is probably your most important statement as a small business, since it showcases how much cash is moving around your business. The best way to think about a cashflow statement is you are counting all the spots where cash enters and leaves your business and accounting for expenses that don’t involve cash transactions (e.g. Amortization and Depreciation expense) and putting them back in. To learn more about Cashflow statements you can utilize The Plain-English Guide to Cash Flow Statement (hubspot.com))

• Statement of Change in Equity is the last key statement as it describes either the increase or decrease in your equity section of the balance sheet. Typically, you begin with your current total equity and then you add in all the increases in your equity. Whether it be net profit, issuing of new shares or other items that may increase it. Then you will deduct out any of the transactions that would decrease your equity, whether it be buying back shares, or issuing of dividends or net losses. If you are in a proprietor your statement of equity would be more consider a change in retained earnings” to “If you are in a proprietorship, your statement of equity would be considered a change in retained earnings. For more information the following from Equity Statement – Definition, Example, Item Explained (corporatefinanceinstitute.com) is a great resource.