Three Reports Your Bookkeeper Should Send You Every Month

What should land in your inbox after each month closes?

Three reports: a profit and loss, a balance sheet and a cash report. Each one answers a different question, and none of them can stand in for another. Together they tell you whether you made money, what you own and owe, and whether you can pay the bills coming up.

They should arrive on a roughly predictable date, once the month's bank and card statements are reconciled. If you're not sure what that step involves or whether it's happening, here's how to tell if your books are reconciled without asking anyone.

Report one: the profit and loss

The profit and loss, sometimes called an income statement, lists what came in and what went out for the month and ends with the difference. That bottom line is the answer to whether the business made money.

Don't read it alone. Ask for it with last month and the same month last year beside it, so a change jumps out. Then look for three things: an expense line that doubled with no reason you can think of, a round number that looks like an estimate, and any balance in an account named Uncategorized or Ask My Accountant. That last one means some transactions were never sorted, and the profit figure is a guess until they are.

Report two: the balance sheet

The balance sheet is a snapshot on the last day of the month. It shows what the business owns, like cash and money customers owe you, what it owes, like loans, card balances and taxes collected but not yet paid, and what's left for the owner.

Check the bank line against your statement for the same date. Check that each loan balance went down by roughly what you paid toward principal. If you collect sales tax, find the sales tax payable line, because that money belongs to NCDOR and should match what you expect to file. A liability that keeps growing month after month without a reason is worth a question.

Report three: where the cash stands

A business can post a profit and still be short on cash. Customers may owe you for work you've already counted as income. Loan principal, equipment and owner draws take cash out without showing up as expenses on the profit and loss. So the third report answers a narrower question: how much cash is really free, and what's due soon.

This can be a formal statement of cash flows. For a small business, a plain one-page summary often does the job better: cash at the start of the month, money in, money out, cash at the end, plus a list of who owes you and what you owe in the next few weeks. Ask for whichever format you'll actually read.

Which report should you read first?

That depends on the decision in front of you. Here's where to start in four common situations.

You want to know if the business is actually making money

Start with the profit and loss, and look at three months together, since one month can be skewed by a big invoice or an annual bill. If margins are slipping, the expense lines will show you where.

Payroll or a large bill is due soon

Go to the cash report first. This matters most for owners whose year is lumpy, like a shop on Greenville Boulevard that goes quiet when ECU students leave for the summer, or a contractor who loses days to a storm in the fall. The cash report shows the gap before you're in it.

You're talking to a lender or taking on debt

Read the balance sheet. A lender will look at what you already owe against what you own, and you want to see that picture before they do, with loan and card balances that match your statements.

You keep the books for a church or nonprofit

You need the same three, broken out by fund. Money given for a building project or a mission trip has to be visible apart from the general fund, so the board can see that designated gifts were spent the way donors intended. That's the heart of church accounting, and it belongs in the monthly reports rather than a side spreadsheet one volunteer understands.

What if the reports never come, or they don't make sense?

Ask for them by name, and ask for last month's reconciliation report with them. If the answer is that the file needs work before reports can be produced, the job in front of you is a cleanup, and QuickBooks cleanup comes before any monthly rhythm can start.

If the reports arrive and you can't follow them, ask for a short note with each package that explains the two or three things that changed. You shouldn't need an accounting background to understand your own business.

Monthly reports for businesses around Greenville

For a business in Greenville, Winterville or Ayden, these three reports are what monthly bookkeeping should hand back to you. A retailer in Uptown Greenville needs sales tax owed to NCDOR visible every month. A trade business working across Pitt County needs to know where the cash sits before a slow January. A church treasurer needs fund balances ready for the board meeting.

If you can't name the reports you get today, start there. You're paying for the work, and the reports are how you check it.