Accounting for Entrepreneurs
Monthly Income Report
You're watching expenses like a hawk, but what about income? Here's why a monthly income report is a must for small businesses with their eyes on rapid growth.
In a competitive business environment, income isn't something that can be taken for granted.
Highly profitable small businesses go out of their way to report and track sales on a monthly, weekly or even daily basis.
If you're new to the process of sales tracking, a monthly income report can be a useful tool for launching a substantive income evaluation initiative. Rather than converting sales information directly into financial sheet data, a monthly income report breaks income data down into a format that can be easily digested and acted upon by management, accounting and sales teams.
The best monthly income reports provide enough information to make them useful to the company, but not so much that they become cumbersome to maintain. If a monthly income report sounds like an obvious addition to your organization's business records schedule, here are a few points worth considering.
- Report format. There are several ways monthly income reports can be formatted to deliver maximum benefits for your organization, but it's common for companies to report sales on a daily or weekly basis. However, in some business contexts, a sale-by-sale data entry approach may be more useful. Each sale that is entered into the report should be sub-categorized into data fields that indicate taxable sales, non-taxable sales, sales tax collected and total sales. You may also want to consider designating sales or income by other categories like sales rep or store location.
- Sales forecasting. Monthly income reports form a foundation for generating monthly sales forecasts. Although it may be impossible to precisely predict exact sales amounts for the coming month, prior month and averaged monthly sales can be a helpful indicator of short-term future income.
- Sales tax reporting. Most accounting applications and POS systems contain accurate sales tax reporting features. But if you haven't implemented the right solutions yet or if you need to create a redundant system, a monthly income reports can efficiently track the amount of sales tax collected and owed. If executed properly, income reports will also prevent the mixing of non-taxable sales amounts with taxable transactions.
- Performance assessments. A robust monthly income report (either manual or digital) is a powerful tool for performance assessments and evaluations. Based on the data fields you have included in your report, you can gauge performance by employee, store or other comparison categories.
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