Four reports give you the full picture of how your business is performing. Without reviewing them regularly, you’re guessing at whether the work is actually making money.

The profit and loss statement shows revenue versus expenses for the month. This is where you see if the business made or lost money. Look at gross margin first, meaning revenue minus direct job costs like labor and materials. If that number is shrinking month over month, your pricing is off or your costs are climbing faster than you’re passing them through. Then look at overhead expenses. Rent, insurance, vehicle costs, office expenses. These should be relatively stable. A sudden jump means something got miscoded or a one-time expense hit the books.

The balance sheet tells you where you stand financially at a point in time. Cash is the first thing to check. How much do you have and is it trending up or down over the past few months. Accounts receivable shows how much customers owe you. Accounts payable shows what you owe vendors. If AR is growing faster than revenue, you’re doing the work but not collecting. If AP is piling up while cash shrinks, you have a cash flow problem building.

The AR aging report breaks down who owes you money and how long it’s been outstanding. Anything past 30 days needs a phone call. Past 60 days needs a harder conversation. Past 90 days and you’re probably writing some of it off. Most trades contractors who struggle with cash flow are sitting on collectible invoices they haven’t chased. A few minutes with this report each week pays for itself.

Job profitability reports matter if you’re doing job costing, and you should be. This shows actual profit by project, not just by month. A month that looks profitable on the P&L can hide individual jobs that lost money. Seeing profit or loss at the job level tells you which types of work, which customers, or which crews are actually worth pursuing. This is where skilled trades bookkeeping separates from generic small business accounting.

Compare actuals to budget every month. If you don’t have a budget, start with last year’s numbers as a baseline. The point isn’t to hit every line exactly. The point is to catch variances early. A labor cost that’s 15 percent over budget for two months running is telling you something. Maybe you underpriced jobs, maybe productivity dropped, maybe you’re paying for overtime you didn’t plan for. Without comparing against a baseline, you don’t know what’s normal and what’s a problem.

The reports only help if they’re accurate. Clean books produce useful reports. Messy books produce reports you can’t trust. If your numbers don’t match what you know is happening in the business, the problem is upstream. Regular bookkeeping services in Pasadena give you financials you can actually use to run the business.