It’s no secret. I really like reporting. In fact, in my regular bookkeeping workflow, running reports is my absolute favorite part. There is something immensely satisfying about seeing information, neatly and clearly laid out, ripe for analysis. In my time as a bookkeeper, I have run A LOT of reports. In the early day, I was a bit fanatical about them and my poor clients received 5-6 reports a month.
Now, I have reeled it in and usually send 2 of my 3 favorites:
Profit and Loss-broken down by time frame
The Profit and Loss report is one of the most quintessential reports in business. Here you see all your income and all your expenses for a certain time period, summarized by line. At the bottom, you see your net income, which is the money you earned for that time frame after your expenses.
This report alone is very powerful and can be run for any timeframe. But there’s more! You can also break down this report into columns representing an additional breakdown of time. Say what?!
For example, you run a Profit & Loss for the month of June. You can then break down this monthly report into 4 columns, each representing a week in June. That way, you not only see the total you earned and spent for all of June, you also see what you made and spent each week.
How to use it:
I use the breakdown of the Profit & Loss report every month for my clients. Often I will select a time period, generally the last 3 months, and view the report by month. This way I can compare their earnings and spending month to month and understand where, if any, shifts have occurred. I can also see in what specific categories the shifts have occurred. This helps them understand the impact of their decisions.
You are a coach and in June you decide to start taking Fridays off to spend more time with your children. This is a tough decision and you wonder how it will affect your finances. At the end of the month, you run the Profit & Loss report for the time frame April-June and break it down by month.
Looking at your earning month to month, you see that your June earnings are $800 less than your April & May earnings- this loss is less than you expected! Now that you understand the cost of the taking Fridays off, you realize that the time you spend with your children is more valuable than the $200 you lose each Fridays.
Profit and Loss- previous year comparison
This report is a fan favorite. In fact, many of my client request this report because of how valuable it can be. The Previous Year Comparison Report is the basic Profit and Loss report, but with two columns, broken down by year. There are an additional 2 column that show the change in each income or expense category, both as a percentage (ie. 20% = up 20%) and in dollars.
How to use it:
This report is great for seeing how your business how grown over the past year. This can help you assess the long-term impact of your decisions and your marketing efforts. It can also help you assess your spending. Often as we earn more, we spend more. This report can show you if you’ve had any significant increases in spending and help you decide if this spending is worth it for your business.
You are a therapist who launched your practice last year. This year, you invested a significant amount of money in marketing efforts to help grow your practice. You wonder if it is worth it. You run the Previous Year Comparison report and see that your gross income has doubled. Your expenses are up for the year because of the extra money you spent on marketing. However, you net income is up 30%.
Even though you spent more on marketing you still ended the year with a 30% growth in your business. The marketing investment was a success.
Item Summary Report
This report is super helpful for anyone who has a product based business or for those who offer multiple services items. If you are using invoices or creating sales receipts to log your individual item sales (you can learn to do this in my course), you can then run a report that shows you a summary of every item you sell. But that isn’t actually what makes the report so cool.
What makes it so great, is that in the next column, it shows you the total you earned from each item AND what percentage of your income each product or service category makes up. Whoa!
How to use it:
I run this report at the end of each month for all my clients who have product based businesses or for those who have multiple service categories. I will send them a report with their top three earning categories and a note about what percentage of their income each one makes up. Often, people are surprised about how they are really making money.
You provide salon services to clients, such as haircuts, waxing, brow shaping, and tanning. You’ve decided to expand one area of your business and are unsure which area is most profitable. You think it is probably brows because you do a lot of those appointments.
You run your Item Summary report and see that actually, even though you sell less haircuts, they make up a greater percentage of your income because the cost of the service is higher. In fact, it makes up 50% of your business income. You now choose to expand your hair services with your end of year goal of having hair makeup 75% of your income.