Why Your Financial Statements Matter More Than You Think

As a small business owner, you’ve probably heard the terms balance sheet and profit and loss statement thrown around before. But what do they actually mean, and why should you care?

I get it. Numbers and reports can feel overwhelming, especially when you’re focused on serving customers, managing employees, or just keeping things running smoothly. But understanding your financial statements isn’t just an accounting exercise. It’s one of the most powerful ways to take control of your business’s future.

The Balance Sheet: A Snapshot of Financial Health

Your balance sheet is like your business’s report card. It lists everything your business owns (your assets) and everything it owes (your liabilities).

When your assets are greater than your liabilities, your business is strong, healthy, and growing. If it’s the other way around—if you owe more than you own—that’s a sign it’s time to make some changes.

A solid balance sheet is essential if you want to:

• Apply for a business loan

• Attract investors

• Sell or transition your business in the future

It’s proof of your financial stability—and investors, banks, and potential buyers will all want to see it.

The Profit & Loss Statement: Your Business Roadmap

Your profit and loss statement (P&L) shows your income, your expenses, and what’s left over—your profit. But it’s not just about looking at what you earned.

It’s about understanding where your money is going so you can make smarter decisions, like:

• Do I need to increase sales?

• Should I raise prices?

• Is my payroll too high?

• Do I need to adjust marketing or advertising?

When your profit and loss statement is accurate and up to date, it becomes a management tool that helps you shape your business strategy. You can spot trends, identify slow seasons, and plan accordingly.

Using Your Financials to Reach Your Goals

One of my favorite things to ask clients is: What are your goals?
Do you want to be a million-dollar company?
Do you want to increase profit margins by 12% or 15%?

Your financial statements give you the information you need to track those goals and make them achievable. They help you see where you are today—and what steps will get you where you want to go.

Let’s Make the Numbers Work for You

If reading your balance sheet or profit and loss statement feels intimidating, you’re not alone. Most small business owners didn’t start their business because they love accounting—they started it because they love what they do.

That’s where I come in. I help business owners not just understand their numbers, but use them to make confident decisions.

If you’d like help reviewing or understanding your financial statements—or just want someone to walk through your numbers with you—give me a call at (480) 580-9876.

At Lemman Tax Accountant, I’m here to help you see the full picture, strengthen your financial foundation, and set your business up for success.