4 Financial Statements to Manage Small Business Finances

Financial statements can be a tool to help small business owners better understand and manage their business finances—especially when it comes to cash flow. Essentially, cash flow is the net amount of cash and cash-equivalents being transferred into and out of your business.

Why is understanding cash flow Important?

At the most fundamental level, your company's ability to create value is determined by its ability to generate positive cash flows. Small business stats reflect how getting a handle on your cash flow can mean the difference between success and potential failure:


  • In response to Covid-19 impacts, more than 50% of businesses plan to improve their accounting practices and start budgeting to ensure stable cash flow according to a 2020 TD survey of small business owners
  • Other studies indicate that a majority of business failures are related to poor cash flow management or poor understanding of how cash flow contributes to a business's financial health

Benefits of preparing financial statements


Financial statements can give you a holistic view of your company's finances and help improve profitability.

  1. Helps keep you on top of your business's finances and cash flow

  2. Provides better understanding of the financial strength of your business

  3. Makes it easier to apply for a business loan and prepare taxes

How financial statements can help you run a profitable business


Explore articles on the four financial statements that can help you get started.

  • Insight: Determine your current financial situation

    Helps you see the financial health of your business at a specific point in time, showing what you own as well as owe.

  • Insight: See how much income is being retained or reinvested

    Shows the money invested into your business by the owner(s) and changes in owners' equity over a period of time.

  • Insight: Find out your business profitability

    Provides company earnings and spending over a set time period and info on costs to create your product or service.

  • Insight: How cash is flowing into and out of your business

    Shows how well your company generates cash to pay its debt and fund its operating expenses.

How the 4 financial statements work together

  1. Income/profit and loss statement provides the net income figure for your owner's equity statement

  2. Owner's equity statement provides your positive or negative equity position to enter as retained earnings on your balance sheet

  3. Statement of cash flows provides your cash position to be included on your balance sheet

  4. Balance sheet provides a summary of your financial position for a specific moment in time

Tips to help you get started


We've compiled information and articles designed to help you understand these 4 key business statements—even if you're a financial novice

  • Separate business and personal finances

    Before you create these four financial statements, you'll need to separate your business and personal finances. If you haven't done this yet, learn more about the benefits of keeping your business and personal finances separate.

  • Be consistent


    Financial statements are a snapshot in time, and it's important to prepare them consistently—some monthly, others quarterly, as well as at the end of your fiscal year.

  • Consolidate your data


    Creating your financial statements can be easier when you collect business cash flow data in one place. For example, connecting your TD Small Business Checking Account to a TD point of sale credit card reader and Online Accounting can consolidate cash flow info, as well as help you get paid faster and have next day access to your money1.

Info and tools to help you manage cash flow

Small business planning and lending resources

  1. Small Business Resource Center
    Access resources and tools that are focused on planning, profit and financing for every stage of your business

  2. How to get financing for your small business
    Explore articles, tools and tips designed to help you get a loan for your small business

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1Next-business-day funding: Fees may apply for optional services. For merchants with a TD Bank settlement account and TD Bank’s standard payment processing setup, funds will be available in the settlement account by 2 PM ET on the next business day. Availability may vary based on merchant-selected payment processing gateway and other chosen services, including but not limited to, the use of non-TD Bank settlement account.