As a business owner, financial statements are a primary key to your veterinary practice success. Financial statements are detailed reports of your practice’s performance. The more comprehensive they are, the better. With a full knowledge of the economic status of your practice, you can better plan for the future of your business. We understand that busy vets do not always have the time to devote to this process. The CPAs at Reliance Consulting, LLC are ready to help. We do not simply offer financial statement preparation. We will also explain your business profitability and help you make informed decisions for future success. To learn more about financial statement preparation for veterinarians, contact our office today.
What Is a Financial Statement?
To sustain and build your practice, it is not enough to know how much you make in a given year. You should also have a detailed understanding of how you made that money – and how you can increase profits in the future. You should create several different financial statements each year. Thorough statements will help you understand profits, losses, and debts over an extended period of time. Correct preparation of these documents could make or break your practice. That is why it is important to work with experienced professionals. Our CPAs understand the many elements of a financial statement. They are also experienced in working with small business owners, and they have a special understanding of the needs of veterinarians.
The Income Statement
Your accountant will prepare an income statement at the end of each accounting cycle. This document is an important benchmark in measuring the net profit of your practice. Your accountant will first list your business’ overall earnings for a specific period. Then he or she will subtract all expenses. These costs will include obvious factors, such as medical supplies, wages, and overhead. Your CPA will also deduct varying expenses, including taxes and as the depreciating costs of property. The remaining number will represent your total profits for a given period. Your accountant could prepare an income statement once per quarter or more often, if needed.
Your balance sheet lays out your assets, debts, and investments in your veterinary practice. To determine the full amount of your assets, your accountant will list:
- Your practice cash account (cash you currently have on hand)
- Money owed you by clients (if your practice offers credit)
- Inventory for sale
- Fixed assets (i.e., your building, x-ray machines, company vehicles, etc.)
Then your CPA will add up all liability, or long-term loans. He or she will also calculate your equity, or the amount you or your shareholders have invested in the practice. The total of your liability and your equity must equal the full amount of your assets.
Statement of Cash Flow
As the name implies, a statement of cash flow shows the movement of cash in and out of your business. This statement can help you track changes in profitability over time. Additionally, the statement of cash flow is extremely clear cut. If your practice is struggling, it can help you find unexpected areas where money may be leaving your business. A statement of cash flow focuses on three primary areas.
- Operations: Money paid for veterinary services, payroll, the cost of supplies, etc.
- Investments: Property, equipment, professional training, etc.
- Financing: Bank loans, dividend payments, sale or purchase of company shares
After subtracting these costs, your accountant will add the remaining amount on all three sections. You will be left with a comprehensive statement of cash flow. After creating this statement, we can help you with cash flow planning to ensure sufficient funds in the future.
Contact Us Today to Learn More
Do not let your financial statements go overlooked. Contact Reliance Consulting, LLC to schedule consultation and lay a foundation for your practice success. Our firm is located in Tampa, and we proudly serve clients from St. Petersburg, Clearwater, Sarasota, Pasco, Lakeland, and the greater Tampa Bay area.