Bookkeeping records what happened. Accounting turns those records into financial statements that someone else can rely on: a balance sheet, an income statement and a cash flow statement. The difference shows up when a lender asks for statements, an investor asks why profit and cash do not match, or a buyer asks what the business earns. Our accounting and financial statements service closes the books each period, makes the adjustments that raw bank activity misses, and produces statements on the basis your audience expects. We work with owners in Naperville, Aurora and Chicagoland, and with businesses in every state.
What the service includes
- Period-end close. Reconciling bank, loan, payroll and sales tax accounts, and reviewing the balance sheet for items that look wrong.
- Adjusting entries. Accruing expenses incurred but not yet billed, deferring revenue received before it is earned, and recording prepaid expenses, depreciation and amortization.
- Fixed asset and loan schedules, with depreciation and principal-and-interest splits.
- Inventory and cost of goods sold, where inventory is counted or estimated and valued.
- Owner equity, with contributions, draws, distributions and shareholder loans in the right accounts.
- Statement packages. Monthly, quarterly or annual statements with comparative periods and management commentary.
- Basis conversions. Restating cash-basis or tax-basis books to accrual for a lender or buyer.
- Multiple entities, with intercompany balances reviewed so they do not distort results.
Which basis should the statements use?
| Basis | How it works | Typically used for |
|---|---|---|
| Cash | Income when received, expenses when paid | Small service businesses, internal use |
| Tax basis | Follows the rules used on the tax return | Pass-through entities that want statements matching their returns |
| Accrual (GAAP) | Revenue when earned, expenses when incurred, under generally accepted accounting principles | Lenders, investors, buyers, larger or growing businesses |
The SBA notes that private companies are not required to follow GAAP, but that does not stop a lender or investor from requiring it. For tax purposes, corporations and partnerships generally may use the cash method only while their average annual gross receipts stay at or below a threshold that is adjusted for inflation, and a business that outgrows it must change methods by filing Form 3115. See cash vs accrual accounting.
Levels of service
Professional standards for accountants recognize different engagements, and the label matters because outsiders rely on it.
- Statements prepared for management. Prepared from your records for internal use, with no assurance.
- Compilation. The accountant presents management's information in financial statement form without providing assurance.
- Review. The accountant performs inquiry and analytical procedures and provides limited assurance.
- Audit. The most extensive engagement, with testing of balances and independence requirements that limit what else the auditor can do for the client.
If a bank, investor, landlord or bonding company asks for reviewed or audited statements, tell us before you sign anything. We will confirm what the requester needs and say whether it is a service we provide or one that needs an independent firm, and we are glad to coordinate the handoff.
Who needs it
- Owners applying for a bank or SBA loan, where lenders ask for several years of statements. See working capital and bank loans.
- Businesses with investors, partners or a board that need regular reports.
- Owners preparing to buy or sell a business, where the buyer will test the numbers.
- Companies with inventory, deferred revenue, long-term contracts or several entities.
- Established businesses that have outgrown a once-a-year look at the books.
How an engagement works
- Consultation. We ask who will read the statements, why, how often, and in what format.
- Written engagement agreement stating the statements and periods, the basis of accounting, the level of service, the schedule and how fees are determined. No work begins until you sign.
- Document collection: access to the books, bank, card and loan statements, payroll and sales tax reports, fixed asset purchases, inventory counts, contracts and prior-year statements and returns.
- Close and adjustments. We reconcile, post adjusting entries and tie the balance sheet to supporting schedules.
- Review and delivery, with an explanation of unusual movements, in the format requested.
- Follow-up: the next close, with procedures updated as the business changes.
You remain responsible for the accuracy of the underlying information, and we will ask questions about anything unusual.
Common problems we fix
- Cash-basis books for a business that needs accrual statements. Receivables, payables and deferred revenue are missing.
- Opening balances that do not agree with the prior accountant's closing statements, so equity does not roll forward.
- Inventory that is overstated or never updated, which distorts profit.
- Payroll and sales tax liabilities that sit in the balance sheet for years without being cleared.
- Shareholder loans and distributions recorded as income or expense.
- Depreciation that differs between the books and the tax return and is not tracked.
- Unreconciled accounts that make the balance sheet unreliable. If this sounds familiar, our bookkeeping cleanup comes first.
Dates that matter
Financial statements are not filed with the IRS, but they drive deadlines. Lenders usually set reporting dates in the loan agreement, and annual statements are often requested soon after year-end, while the tax return may be extended. For calendar-year businesses, 2026 returns of partnerships and S corporations are due March 15, 2027, and corporations April 15, 2027, so closing the books early shortens tax season.
How we can help
We prepare statements that tie to the tax return and to the bank, and we explain them in plain terms. Pair the service with virtual CFO and advisory if you want budgets, forecasts and monthly meetings built on the statements. We meet clients in Naperville and Aurora and work remotely with clients in other states. To discuss your needs, contact us.
Frequently asked questions
Do I need GAAP financial statements?
Not by law for most private companies. You need them if a lender, investor or buyer requires them. Ask the requester which basis and which level of service they expect before work starts.
What is the difference between a compilation and a review?
In a compilation, the accountant presents your information as financial statements and gives no assurance. In a review, the accountant also performs inquiry and analytical procedures and gives limited assurance.
Can my tax return and financial statements show different profit?
Yes. Differences in depreciation, timing of income, nondeductible expenses and the accounting method used for tax can all create gaps. A reconciliation schedule explains them.
Official sources
- SBA: Manage your finances
- IRS: Publication 538, Accounting Periods and Methods
- SBA: Write your business plan
- IRS: Recordkeeping for small businesses
This page is a plain-language summary. The official source controls if there is any difference.
General information only, not tax, legal or accounting advice for your situation. Rules, limits and deadlines change; confirm the current rules with the official source or a qualified professional before you act. Reading this page does not create a professional relationship with CPA Tax Payroll and Accounting Corp.