Timely Financials-1

Welcome to


The Learning Center

One of our core values is empowerment through education - it means a lot to us.

The Learning Center was made as a resource for business owners and inquisitive individuals who want to learn more about the current world of taxes and accounting.  If that sounds like you, you're in the right place.

Reach out if you have any questions.  Thanks!

2 min read

Keeping on top of overdue accounts

By Sheila Malavet on Feb 04, 2020

How long do your customers take to pay you?

A Xero Small Business Insights report showed that late payments to small businesses are improving. But overall, payments often still arrive after due date.

Topics: Accounting Running Your Business
1 min read

Scaling Up Your Business

By Sean DiMercurio CPA CGMA on Jan 30, 2020

Scaling up your business isn't about steady growth over time – it's a predetermined strategy to proactively expand your business at pace and achieve hypergrowth.

Topics: Running Your Business
2 min read

Funding your business – equity or debt?

By Sheila Malavet on Jan 28, 2020

When you're looking to expand and grow your business, you'll almost certainly need extra finance to achieve this. But what’s the best funding route for your company?

Topics: Accounting Running Your Business
2 min read

Choosing a new business bank account?

By Sheila Malavet on Jan 23, 2020

A business bank account is an essential requirement for any business. But with so many banking providers out there, how do you know which business account to choose?

Topics: Accounting Cash Flow Running Your Business
2 min read

Understanding Your Profit and Loss Statement

By Sheila Malavet on Jan 21, 2020

Your profit and loss statement (P&L) helps you understand your business performance and profitability over time. It’s sometimes called an Income statement and its main purpose is to list income and expenditure.

Whereas a balance sheet is a snapshot in time, the P&L shows transactions over a specific period of time. This can be a month, quarter, financial year or any other period, and it can be a stand-alone report or a comparative period report.

Together with the balance sheet, these two reports provide a comprehensive understanding of the financial position and performance of a business.

The profit and loss statement has two main sections: income and expenses.

These may be further subdivided depending on the complexity of the business and reporting requirements.

Income or Revenue

Income primarily includes main business activities such as sale of goods or services. Other income such as interest received, capital gains or income from secondary business activities is also reported.


Expenses

Expenses are usually divided into two sections: direct costs, or cost of goods sold, and expenses. Cost of goods are those that are directly linked to the provision of services or sale of goods. For example, if you buy widgets from a wholesaler and sell them at a marked-up value, the cost of the widgets is a direct cost, not an overhead expense.

Other types of direct costs might be importing and freight costs, contractor costs or certain equipment. Some direct costs are fixed, that is, they are the same from month to month, or they could be a fixed percentage of sales; others vary in value but are still related to the income producing activities.

Overhead expenses are all the other expenses required to run the business, regardless of the level of income: for example, rent, utilities, bank fees, bookkeeping fees, professional development costs, vehicle costs and staff costs. Many of these costs form the basis of working out your break-even point, or how much it costs just to open the doors for business.

There are some expenses which may be reported as a direct cost in one business but an indirect cost in another type of business, for example, merchant fees or contractor costs.


The Bottom Line

Total income minus total expenses results in the net profit (or loss), is often called ‘the bottom line’. Often business owners are just interested in looking at the bottom line, but a true financial picture requires an understanding of several reports and an ability to see the big picture that the reports are illustrating.

The P&L is a vital tool to analyze for trends over time.

  • What does your P&L tell you about relationships and ratios between sales and expenses, seasonal changes and annual trends?
  • Have all your direct costs been allocated correctly?
  • Have you recouped all billable expenses from customers?
 
Financial statements help you understand the big picture for your business. With deeper understanding of your business operations and performance you can make informed decisions about your business finances.
 

Have a question?

We'd love to hear from you!  Feel free to contact us or reach out to your THG team member today!

Topics: Accounting Running Your Business
1 min read

First-Year Start-Up Tax and Accounting Issues

By Sean DiMercurio CPA CGMA on Jan 19, 2020

Some of the most common stressors encountered by entrepreneurs involve tax liabilities, whether the business is booming or they’re struggling to keep their head above water. The best way to avoid these pitfalls is to learn about them ahead of time.  Here’s what every entrepreneur needs to know.

Topics: Running Your Business
1 min read

How To Minimize Your Tax On Social Security Benefits

By Sean DiMercurio CPA CGMA on Jan 19, 2020

Whether your Social Security benefits are taxable (and, if so, the amount that is taxed) depends on a number of issues.  The following will help you understand the taxability of your Social Security benefits. Watch now.

Topics: Tax Tax - Individual
1 min read

The Difference Between A Tax Credit and Tax Deduction

By Sean DiMercurio CPA CGMA on Jan 19, 2020

Learn about the important difference between tax deductions and tax credits. In general, a deduction reduces taxable income, whereas a credit reduces the tax itself. Watch to learn more.

Topics: Tax Tax - Individual Tax - Business
2 min read

4 key things to get right when starting a business

By Sheila Malavet on Jan 16, 2020

Starting your own business is a BIG leap of faith. Will you find any customers? Will you make enough income? These are questions that any founder will ask themselves.

Topics: Running Your Business