GX Inc. operates an online retail business through Amazon and Shopify. The CEO has a background in science and operates in a niche market in the healthcare industry. In a span of about four months, GX Inc. had increased revenues from $2,000 per month to $8,000 per month. To maintain accurate accounting, GX Inc. approached us for financial advice.
Issue: Creating financial statements for a business that has not maintained accounting records.
GX Inc. did not have prior year financial statements. However, GX Inc. maintained some records in an accounting system and data from Amazon. GX Inc. maintained inventory in Amazon fulfillment centers but did not maintain inventory records. Without inventory records, GX Inc. was unable to take decisions about the reorder quantity, quick selling, and obsolete inventory.
Without financial statements, GX Inc. could not review its performance and take appropriate decisions.
Financial statements were required for 2019 and 2020 to obtain a bank loan in order to grow and expand operations.
Solution:
Automation features in QuickBooks and Amazon was enabled to ensure that data and records would be automatically entered and maintained. We reviewed the data from documents and receipts, Amazon reports, and bank statements. Automation features helped save the company time, which the CEO could utilize in growing the business.
Financial statement notes were created to enhance the credibility of the financial statements. The notes explain in detail the various income, expense, assets and liability amounts.
Sales income is derived through Amazon and Amazon Canada. We created multicurrency income and expenses to track sales and expenses through each channel for better reporting and decision making for the CEO.
GX Inc. was not aware of various benefits available due to the economic shutdown. We advised GX Inc. to apply for loan payment deferrals and was successfully approved. Further, our efforts with the financial statements resulted in successful approval of a $20,000 bank loan.
GX Inc. had incurred incorporation costs prior to actual operations. Our recommendation reduced the expenses and increased the profit.
GX Inc. had networking and business meeting expenses, marketing and advertising expenses, a car, and home office expenses. We analyzed these expenses and suggested a course of action that allowed GX Inc. to be eligible for tax deductions and increased the profitability of the busines.
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