Tax & Financial Statements 101 for the Medical Industry: Understanding What they Are and Why You Need Them

As a medical or dental provider, some of the most important documents to familiarize yourself with are your company's financial statements. These documents serve a number of purposes, but their primary job is to provide you with the information you need to make smart financial decisions for your day-to-day operations. In some cases, your financial statements will also satisfy lenders' documentation requirements when you borrow money to expand staff or open a new office.

The three main types of financial statements are:

1. Balance sheet: a quick view of your business finances. The total amount of liabilities is added to the total amount of owner's equity and must balance with the total number of assets.

2. Profit and loss statement: This income statement is helpful in projecting sales and expenses.

3. Cash flow statement: This statement provides a quick look at cash inflows vs. cash outflows.

There are different financial reporting frameworks that can be used when preparing these reports; a full discussion of the choices is outside the scope of this blog post. However, your local business accountant can explain the different options to you, and can help you evaluate the pros and cons of each one.

Basic tax and financial statements are prepared based on the information you provide to your Arizona CPA firm; therefore, they are not audited or independently verified. If your lender needs some assurance of the information, your CPA may prepare a "compilation" report, which provides a statement saying that the CPA believes the financial statements are free from material misstatements and appear appropriate in form.

There are some nuances to preparing and reading business financial statements, so having a small business CPA who specializes in medical to rely on can be both helpful and reassuring, so you know you're relying on the information you need to run your business.

To learn more about the business tax, accounting and bookkeeping services Arizona CPA, Sean Core CPA PLLC, provides, contact us online today, or call (480) 626-5043.