Guide to Preparing Basic Financial Statements

Purchase an off-the-shelf, small business accounting system

There are several software programs designed for small business accounting that run from $50 to $3000 and can do everything from payroll to inventory to printing checks. These programs will create the financial statements for you automatically based on your entries.

I recommend: Quickbooks is probably the most well-known system on the market. They offer different versions including a Web option that lets you manage your finances online. Other options include Simply Accounting and Peachtree Accounting.

Do it yourself with templates from the Web for under $50

For just the basic forms, several Web companies offer inexpensive templates to download that are an easy way to get started creating your financial statements while staying on a budget.

I recommend: If you're comfortable tracking your numbers in a spreadsheet and don't need sophisticated features, check out the templates available from Urgent Business Forms (balance sheet and income statement only) or Ozgrid (more features, including calculating financial ratios).

Hire a bookkeeping or accounting firm

For companies that have complex financial needs or do not have the resources to do it in-house, an outsourced bookkeeper or accountant may be the best solution.Pricing is based on transaction volume and can be cheaper than hiring a bookkeeper on staff.

I recommend: TADAccounting offers a full range of services including payroll, inventory, taxes, as well overall financial reporting. Another option is Balance Your Books, which offers bookkeeping services over the Internet.