Did you know that, according to United States federal law, businesses are required to file annual financial reports?
If you’ve never written one of these reports before, it can seem like a daunting task. How do you even know where to begin?
Here, we lay out a few of the things you need to keep in mind to get started on writing your company’s first annual financial report.
Include Relevant Information
Start with an overview of your company. Explain what you do and how you do it. Include any information about how you interact with your industry and any awards that your company holds.
Next, include a letter from the owner or CEO of the company directed to your shareholders. This is your opportunity to provide a personal update about the business. You can also provide details about any significant changes in your business that aren’t captured through your financial data.
After that should come the financial overview of your business. The status of your annual finances should be shown through balance sheets, profit and loss statements, and any other reports that are relevant to showcasing your annual finances.
Save room to include any explanatory notes you need to clarify the information in these finance reports.
Craft a Narrative
Some people think of annual reports as simply being a list of charts and tables that show how much money the company has. And this information should be included in the report. However, the overall goal when you write an annual report should be to communicate confidence and ease to your shareholders about the standing of the business.
Did you have a large amount of financial growth this year? Did you expand your business to new regions or markets? Did your company gain new recognitions, certifications, or awards within your industry?
Take time to uncover the specific story that you want to communicate about your business. Once you know the story you want to tell, you can cater the included information specifically to supporting that story.
Other Uses for Your Annual Financial Report
While your company’s financial report is a useful tool for your shareholders and the public to keep an eye on what’s going on, it can also help you with your financial strategy in the coming year.
Financial analysis benefits your company’s ability to predict what’s next for you and your industry, allowing you to make more intentional decisions about future strategies. When writing your financial report, keep this purpose in mind so that you’re creating the most useful tool possible for your business.
Get Started Today
These are the basics you need to know to write an effective and useful annual financial report for your team, your shareholders, and the public. Once you feel confident with the concepts laid out in this article, you can advance to learning more about the proper ways to design your annual report and how to share it with the public.
Eager for more insights on how to more effectively run your business? Take a look at the other articles on our site today!