Sometimes documenting and understanding our finances and accounting can be really hard. Especially if you’ve recently opened up a new business and you’re still working on the kinks. I’m sure we’ve all had that moment when we’ve received a document, either from our employer or from our accountant, and we simply stare at the screen like:
For me, this begins what I like to call the swirling pit of irritation. I get a document from my employer and I have no idea what it is or what I’m supposed to do with it. I try to research it, but I’m not really sure what I’m even looking for or even if google is giving me the right information. One thing leads to another until I’ve reached a point where my laptop has a hammer through its’ screen and I’m eating a gallon of ice cream vengefully.
Fortunately, there are resources you can use to help you understand your tax and legal documents, so you don’t end up like me.
To begin, businesses record their performance in standard formats called financial statements. The most common of these are:
- Cash Flow Statement
- Balance Sheet
- Income Statement (Statement of Earnings, Statement of Profit and Loss, Statement of Operations)
There are tons documents besides these three, however. Documents from the IRS such as W-2’s, 1099’s, and 1040’s are just as important as keeping up on your financial statements.
Honestly, these ones usually give me the most confusion. What are they used for specifically? What information are you giving out? And why does the IRS need them? For some of you, this may be child’s play. But for some people who’ve never really thought about it or have only had to fill out a few forms, it’s best to know as much as you can about them and what they do for you and your accountant. I would recommend visiting this link to Bankrate to learn more about each of these documents.
Another great resource for understanding your documents is to simply contact your accountant. Let them know you are confused or struggling with the documents or forms you have been given and that you would appreciate their advice and council on the subject. Your accountant should be more than willing to answer any questions you might have and help you take another step towards understanding your finances on a higher level.
If you don’t currently have an accountant don’t panic! Stapley Accounting is more than willing to take your calls and meet with you. Feel free to contact us with any questions or concerns you might have.
Email us at email@example.com,
Call us at (435) 294-0030,
or simply ask your question in the comment below.
Remember to use your resources wisely and take your time to really invest in your accountanting.
Have a great weekend!