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Why Profit & Loss Statements Matter

A common practice in the world of business when it comes to accounting is to just have an account that deals with all of the money that the business is earning and spending and then calling it a day. While this is a good first step, if you want to learn from people like The ACT Group you need to bear in mind that profit and loss statements matter as well. If you just have a bank account that is used for business transactions and you get a statement from this, you would see how much money has gone in and out but you won’t know how to figure out looking into whether or not you earned a profit or sustained a loss.

With all of that having been said and out of the way, it is important to note that if you were to make profit and loss statements then problems like this would no longer end up happening. Most of the time you wouldn’t really have all that many potential benefits to avoiding making these apart from saving a little bit of time that really won’t make all that much of a difference.

An accountant hired for the specific purpose of drawing up these statements would be a good investment. Even if you have sustained a loss your business can keep going, but in a situation like this it becomes even more important to get an idea of how significant of a loss this was as well as how likely it would be that your company can survive. Paperwork like this is so important, and a common reason why so many small businesses fail is due to the reason that they don’t pay attention to this.

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