Mastering Small Business Financial Statements: Pet Care Industry

Want to learn how to prepare and manage financial statements for small businesses? Small business financial statements commonly include income statements, balance sheets, and cash flow statements. Mastering these documents empowers entrepreneurs to make informed decisions and drive business growth.

To manage your business’s accounting, including financial statements and more, you can hire a qualified professional accountant or use petcare software like PetExec, which allows you to manage much of the accounting required by your business, such as reporting, revenue and expense tracking, and inventory management. 

‍

What are financial statements?

Financial statements are formal records of a company’s financial activity that show its current financial status. Financial statements are used for tax, financing, or investing purposes, and they are required for audits. Financial statements show how your company is performing and whether you’re profitable. 

‍

Why is it important to have correct and accurate financial statements?

Correct and accurate financial statements allow you to measure the financial health of your company. Financial statements let you analyze whether your business is making a good profit, only breaking even, or worse…, losing money. If your company is not as profitable as you would like, correct and accurate financial statements can reveal where trouble lies so you can make changes to help improve profitability. Financial statements also allow you to see what’s coming down the pike in the future.

‍

Types of Financial Statements

The types of financial statements for small businesses are the same, regardless of the type of pet business you own. You’ll need to create and maintain the following financial statements:

• Balance sheet: This document is a statement of your business’s assets, liabilities, and equity. 
• Income statement: Also called a profit and loss statement (P&L), the income statement shows your business’s revenues (money coming in) and expenses (money going out), gains, and losses.
• Cash flow statement: A summary of how much cash is entering and how much cash is leaving your company during an accounting period.
• Owner's equity statement: A report that demonstrates the difference between the business’s total assets and its total liabilities, which is used to place an overall value on the business owner's equity.

‍

Balance Sheet for Pet Businesses

A small business balance sheet show’s your company’s assets, liabilities and equity all in one place. All together, these numbers tell the story of how much money you have, how much money you spend, and shows you the true value of your business. Balance sheets are usually prepared quarterly, and display:

Assets: These include cash revenue from sales, as well as tangible assets (for instance, if you own a building, pet grooming equipment, etc.), and intangible assets (for example, if you hold a patent).

Liabilities: These include the amount of money you pay out. Examples include employee payroll, supplies, rent, utilities, insurance, and taxes. 

Equity: The difference between your assets and your liabilities is called equity. The equity defines the net worth of your company. A simple formula to calculate equity is:

Assets – Liabilities = Equity

‍

Income Statement for Pet Businesses

Income statements, also called profit & loss statements (P&L), show money coming in and money going out over a period of time. Income statements may be created monthly or quarterly. Income statements show your company’s revenue, expenses, gains, and losses so you can see your net income (your overall profit, or net profit). A simple formula to calculate your net income is:

Revenue – expenses = net income (net profit)

‍

Statement of Cash Flows for Pet Businesses

A cash flow statement shows exactly how much cash is entering and leaving the company. Cash coming in is called cash inflows. Cash going out is called cash outflows. Although a cash flow statement sounds similar to an income statement, there are some differences. A cash flow statement only shows cash—it does not include non-cash accounting, such as depreciation.

‍

How to prepare financial statements for small businesses?

If you’re new to learning how to read financial statements it can help to review sample financial statements for small businesses. If preparing financial statements feels overwhelming, you can hire a professional accountant to help you. They will still need key information, and this is where financial reporting software is a big help.

‍

Financial reporting systems like those found in PetExec petcare software are not only fully integrated, but they are tailored specifically to pet businesses. Whether you want to tackle all of your accounting yourself or plan to hire an accountant to assist you, using PetExec helps streamline and automate your reporting. PetExec’s cloud-based software provides detailed accounting reports and has an export function to the nation’s leading accounting software, QuickBooks. With PetExec, you can:

• Keep track of your revenues
• Monitor projections and comparisons
• View statistics on a daily basis 
• Run reports on employees and clients
• Track inventory

‍

Commonly Asked Questions

What are the requirements for reporting financial statements for small businesses?

All companies operating in the United States are required by law to file financial documents in their state of incorporation, whether small or large, privately owned or public. Additionally, all companies must file tax documents with the Internal Revenue Service on a quarterly and annual basis. Financial reporting software can generate the reports needed to create financial statements for accounting purposes. For small pet businesses, such as dog groomers, dog daycares, boarding facilities, dog training businesses and more, you can streamline running your day-to-day operations and financial reporting with a petcare software system.

‍

How do I set up financials for my small business?

If you’re new to learning how to prepare financial statements for a small business, the process can feel overwhelming. To set up accounting financial statements, you can hire a qualified professional accountant and use petcare software like PetExec, which includes financial reporting software to help you to manage much of accounting required by your business, such as reporting, revenue and expense tracking, and inventory management. You can also use a hybrid approach by utilizing petcare software with integrated financial reporting software that generates reports for your accountant. When setting up financials for your small business, the three key financial statements you will need include:

Balance sheet: A statement of your business’s assets, liabilities and equity. 

Income statement: Shows your business’s revenues (money coming in) and expenses (money going out).

Cash flow statement: A summary of how much cash is entering and how much cash is leaving your company during an accounting period.

‍

Can I do bookkeeping myself?

If you don’t want to hire a professional accountant, it’s possible to do bookkeeping yourself as long as you have the proper knowledge and tools to do so. Financial reporting software will help you create the financial statements you need, including balance sheets, income statements, cash flow statements and more. For small pet businesses, petcare software like PetExec offers financial reporting software that generates reports to assist with creating the financial statements you need. Not everyone feels confident managing their books on their own. Spending a lot of time on accounting can also take you away from running the day-to-day operations of your small business. Many small business owners hire qualified professional accountants to help with bookkeeping. In these cases, using financial reporting software allows you to generate the reports your accountant needs to create your financial statements and file your taxes.

‍

Is the pet care business profitable?

Pet care businesses like a dog grooming business, dog day care, boarding facility, pet sitting service or dog training company can be highly profitable if you operate them well. If you’re thinking about starting up a pet care business, first do your research to understand if there is a need for your business in your area. In order for a pet care business to be profitable, you have to employ smart business strategies and keep a close eye on the financial health of your business. The best way to know if your pet care business is really profitable is maintaining accurate financial statements, including balance sheets, income statements, cash flow statements and more. Good petcare software systems offer integrated financial reporting software that generates reports to help you or your accountant create the financial statements you need to run your company profitably. 

‍

How to create financial statements for a small business?

Correct and accurate financial statements are vital for anyone operating a small business. Financial statements help you measure the financial health of your company so you can make a profit or grow your business. Financial statements also reveal if you are only breaking even, or worse, if your company is losing money. If your pet care company is not as profitable as you would like, correct and accurate financial statements can help you make changes to improve profitability. Many small business owners hire qualified accountants to help with bookkeeping. Additionally, petcare software like PetExec, which offers Export of financial reporting software, allows you to generate the reports needed to create vital financial statements.