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Preparing year end statements

A year end statement is basically a detailed listing of all your companies' debts and assets. It will provide information on how much money you paid to quarterly taxes and include a profit and loss sheet. Each company will have different things on their year end statement, but you need include the following:

  • Gross revenue
  • Labor
  • Controllable and non-controllable expenses
  • Bottom line
  • Profit and loss
  • Quarterly tax payments

Some graphs and charts will make your year end statement easier to read. It will also help to clarify the variations in numbers between different quarters. Normally a year end statement will show all the income and expenses for your company. Depending upon the type of year you run on, it will reflect it as a fiscal year or a calendar year. The information found in the year end statement will provide information about the cost of goods and other expenses and how they are directly related to your income. It will show if you have a high mark-up value on your products to generate enough revenue for the company.

Each company must provide information about their cost of goods sold in their year end statement. If you are a non-profit organization, this information is vital to your donors. If you receive continuing donations from larger companies, they will want to see what you are doing with their money and how you are looking for ways to earn funds without their financial support.

You must include a profit and loss sheet that clearly explains the tangible and intangible costs related to the company. A profit and loss sheet will include the costs it takes to operate the company and the money that is spend on fixed and intangible assets. All your loans, credit cards, administrative fees, and other professional fees will need to be included in this section. You must also list information about your management structure and information about your investors or shareholders. A year end statement will look similar to your annual report; only it does not need to look as professional. For most companies, the year end statement is kept only for their records and to be filed with their states and federal income taxes.

A year end statement will also include a balance sheet that details the cost of the companies operations. The balance sheet will provide information about new machinery that has been purchased, loans that were taken out to purchase equipment, and mortgage payments. If you pay money to shareholders, this money must also be included in the balance sheet. A balance sheet is basically a representation of the company's income and expenses since it was established. It can help you distinguish if you are investing in the right things, like equipment, to help the company become profitable. A balance sheet can also help you decide if you are making or losing money for specific time periods. If you have a quarterly report that clearly explains your profit and loss for each month, it will be able to predict the market trends and decide why you earned more or less that quarter.

A good accountant can walk you through the year end statement process. They will be able to help you reconcile your accounts so that everything matches up properly. Some of the paperwork you need to have ready for year end statements includes the following:

  • Employee wages and taxes

  • Income, expenses, and quarterly taxes

  • W-2s and W-3s

  • Expenses that can be used as tax deductions

Once you finish up your year end statements, start organizing this year's information to make it easier for next year's year end statement. Always plan ahead to avoid confusion and to keep your business running smoothly.

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