Choose a statement
Multi-step statement
Separate net revenue, inventory costs, operating expenses and nonoperating items to see gross profit and operating income.
Single-step income statement
Compare all revenue with total expenses. Enter inventory and purchasing costs when the business sells goods.
Small-business income and expense worksheet
Start with gross receipts, subtract returns and inventory costs, then review recorded expenses. Compare the resulting book profit with adjustments needed for a tax return.
Nonprofit activities summary
Record contributions, program and investment income and expense functions. Reconcile opening net assets to the ending total. Complete financial statements can also require classification by donor restrictions, expenses by nature and function, and explanatory notes.
Comparative statement
Enter prior net revenue, cost of goods sold and operating expenses on the same accounting basis. A dash identifies a percentage change that cannot be calculated from a zero prior amount.
Working across states
Record the tax expense actually recognized in your books. The headquarters address alone does not determine where an entity files or how much it owes.
California distinguishes LLC annual taxes and fees from corporation franchise and income taxes. Check entity type, tax year, California business activity and any available exemptions. In Texas, reporting year, entity type and annualized total revenue matter. A Texas entity below the no-tax-due threshold can still have an information report to file. Delaware distinguishes its domestic corporation franchise tax from the annual report required of a qualified foreign corporation.
When a Texas organization prepares its own figures, a partner, officer, employee or principal can sign for the organization and state the role they hold. Outside bookkeeping work and issuing an accountant’s report on another entity’s statements are different services. A bank’s request for a compilation calls for an eligible practitioner to undertake that engagement.
Preparing a charity filing
A management summary can help reconcile figures before a filing. A charity may also need complete financial statements, an independent review or an independent audit.
For example, a charity subject to California’s Attorney General reporting statute generally needs an independent audit when fiscal-year gross revenue reaches $2 million after excluding government grants and government service contracts for which the government requires an accounting. Incorporation outside California does not settle whether the charity must report there.
In New York, a charity subject to Executive Law §172-b with more than $1 million of annual gross revenue and support generally needs an independent CPA audit. Above $250,000 and through $1 million, the law calls for an independent CPA review. At exactly $250,000, check the instructions for the filing the organization will make, because the review and unaudited provisions overlap. A requested compilation supplies neither a review nor an audit.
California Attorney General’s charity reporting guidance · New York Executive Law §172-b
Using the statement
What figures should I enter?
Use the amounts recorded for the period, all in the same currency. Enter full units even when you want the finished statement to show thousands. For example, 4,250,000 GBP appears as GBP 4,250 when rounded to thousands. The builder computes totals before rounding.
Can I send a statement to my accountant?
Yes. Select preparation or compilation to identify the work you want to request. The document records your management figures and your intended recipient. The accountant decides whether to undertake the engagement and issues any resulting report separately.
How does this relate to Schedule C?
Book profit is a starting point. The federal tax calculation can require adjustments for business use of a home, deductible meals, depreciation and personal use. Check the IRS instructions for the return year and keep supporting records.