The Importance of an Income Statement
- projectdoneangie
- Dec 4, 2011
- 2 min read
In my earlier blogs I have discussed the importance of getting your receipts and statements organized and balanced each month. A software program makes this task easier but you can also use Excel if you prefer. This small step will save you so much money.
Once you have the hang of keeping your papers organized, you can work on reading and understanding your income statement. This report, also called a P&L statement, tells you how much money you have made and what your expenses are.
You can use this information to plan a realistic budget, plan for future wants and needs, plan for retirement, etc. There are so many uses for this report! It is important that your paperwork is in order and everything is accounted for because accurate numbers give you the real story.
Learning to use this report is the key to helping you file your tax returns or helping you read the tax forms that your CPA sends for your signature. Please do not sign the tax forms if you do not know what the numbers mean. Blindly signing these reports can lead to a very messy audit. When you don’t know how the tax return information relates to your records, you may have to recreate your story based on memory years down the road. Protect yourself and find out how it all comes together which will save you time and money.
Stay tuned for more information on this topic. Since we are getting closer to the end of the year, the sooner you get started on this, the better. I am here to help and answer any questions that you have. You can subscribe to my blog for future information or send me a message on my facebook page at http://www.Facebook.com/ProjectDone which I will gladly answer. If you feel that you need additional help, you can contact me by email and we can set some time aside to get your numbers organized and audit proof!
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