Year-end financial statements, such as the balance sheet and profit & loss statement, provide a snapshot of a company’s financial position and performance at a specific point in time.
We all know this by now, right?
These statements are important because they provide information about the company’s assets, liabilities, revenues, expenses, and net income.
But that’s not all.
Year-end financial statements are also used by lenders, investors, and regulatory agencies.
This last one? Think IRS and your state income tax department, but also public grants and the small business administration, if you’re thinking about leveraging their financing.
Let’s do this!
Know the Past, Prepare for the Future
Year-end financial statements serve as a way for a company to reflect on its performance over the past year and to set goals for the future.
By analyzing these statements, a company can identify its strengths and weaknesses, as well as any trends or patterns in its financial performance.
This information can be used to make informed business decisions and to develop strategies for improving financial performance going forward.
Overall, year-end financial statements are an essential tool for understanding a company’s financial position and performance, and for making informed business decisions in the “here and now.”
But that’s not all, is it?
Good financial analysis is important because it helps a company understand its financial performance and position, and identify opportunities for improvement.
By analyzing a company’s financial statements, savvy investors can gain a better understanding of the company’s strengths and weaknesses as well as any trends or patterns in its financial performance.
This information can be used to make informed business decisions and to develop strategies for improving financial performance now and in the future as well.
Specific financial metrics that are closely tied to the unique needs of a company take the “mere mortal” reporting of the “holy trinity” of financial statements, and puts your value-driven metrics data on steroids.
For example, in real estate investing, subcontractor hours per renovated property may be a key value driver, while in the technology industry, research and development expenses are more likely.
By identifying and analyzing these unique value drivers, a company can better understand the factors that drive its financial performance and make informed decisions about how to optimize them.
Now, are you ready for the other reason? Hint: it’s super-important right now!
Uncle Sam’s Insatiable Hunger
Duck season… wabbit season… TAX season!
(Do you picture Elmer Fudd accidentally blowing his hunting cap off his own potato-shaped head with that double-barrel shotgun he lugged around? I do!)
It’s coming, and they’re going to announce the opening of e-file season for tax year 2022 reporting pretty soon, but before that there’s a date that we know, right NOW, that you need to circle on your calendar:
January 17, 2023
This is the fourth estimated tax payment deadline, and in my mind the most hugely important one of all.
It certainly is right now, in early January!
If you’re following me regularly this is going to sound familiar, but it is definitely worth repeating: if you are required to make estimated tax payments, it is important to make timely payments to avoid underpayment penalties and to ensure that you are paying the correct amount of tax.
You can make your estimated tax payments online by using your “favorite search engine” with the search term IRS Direct Pay. Click the big blue Make a Payment button, and it’s just like filling out any other online form, except it makes you repeat some information twice.
There are only four due dates for estimated payments all year. They are generally due on April 15, June 15, September 15, and January 15 of the following year. Remember, of course, if the 15th of a month falls on a weekend or holiday then you get an extra day or two.
For instance, like this month. The weekend, and our celebration of the life of Martin Luther King, Jr. gives us two extra days.
…In Conclusion
By completing accurate profit and loss and balance sheet statements in a timely way you are not only giving yourself the best possible tools for past performance and future forecasting, but you are also able to estimate the best possible tax payment.
Making this last payment well within the $1,000 window our federal government requires can not only save you potentially hundreds in underpayment penalties, but you have a lot less money stress when you actually file in a couple of months.
A classic win-win-win Stephen Covey scenario.
You have 9 days, okay?
Don’t pay Uncle Sugar a dime more than he’s entitled to.
I hope you’re able to thank me later!