Financial statements that show the real picture

Who it is for

• Companies that need year-end accounts to support the company tax return, a shareholder request or an ASIC direction
• Trusts, whose trustee lodges a trust tax return every year unless the ATO says one is not needed
• Self-managed super funds, which must prepare a statement of financial position and an operating statement every year for the independent audit
• Sole traders and partnerships who want a clear view of profit, assets and cash flow
• Business owners applying for finance, since lenders commonly ask to see recent accounts

The four main financial statements

Ross Accounting prepares all four of the main financial statements for businesses, companies, trusts and self-managed super funds, so you, your bank and the ATO can see exactly where things stand.

Each statement answers a different question. The balance sheet shows what the entity owns and owes on one date. The income statement (often called the profit and loss) shows whether it made a profit over the year. The cash flow statement tracks money actually received and paid, which can look very different from profit. The statement of retained earnings shows how much profit has been kept in the business rather than paid out.

Profit and cash are not the same thing: a business can be profitable on paper and still struggle to pay its bills on time.

Who needs financial statements?

The rules depend on the type of entity. In general terms, the main obligations look like this.

Companies

ASIC explains that most small proprietary companies do not have to prepare a formal financial report under the Corporations Act. One may be needed if ASIC directs the company to prepare it, if shareholders request one, or if the company is controlled by a foreign company (some foreign-controlled companies can rely on ASIC relief).

A proprietary company is "large" for a financial year if it meets at least two of three tests: consolidated revenue of $50 million or more, consolidated gross assets of $25 million or more at year end, or 100 or more employees at year end. ASIC states these thresholds apply to financial years starting on or after 1 July 2019, which includes 2026–27. Large proprietary companies must prepare and lodge a financial report and a directors' report for each financial year, and the accounts must be audited unless ASIC grants relief.

Even when no report goes to ASIC, a company still needs accurate year-end accounts to complete its company tax return, work out franking and keep track of loans to shareholders and directors (see our Division 7A guide).

Trusts

According to the ATO, a trustee must lodge a trust tax return every year, whatever the amount of net income, unless the ATO advises that no return is required. Year-end accounts show the trust's net income, which is the starting point for deciding distributions and preparing the trust tax return. Our trustee resolutions guide explains why the timing of those decisions matters.

Self-managed super funds

The ATO requires SMSF trustees to value fund assets at market value and prepare a statement of financial position and an operating statement every year. These go to an independent, ASIC-registered SMSF auditor, who must be appointed no later than 45 days before the SMSF annual return is due. The audit is required even in a year with no contributions or payments. See our SMSF annual audit and return guide and our self-managed super fund service.

Sole traders, partnerships and loan applications

For sole traders and partnerships, a profit and loss and a balance sheet make the tax return simpler and show how the business is really tracking. Banks and other lenders commonly ask for recent financial statements when assessing a business loan or a loan to the owners, so having them ready can save time.

What directors are responsible for

ASIC's information sheet for directors (INFO 183) says a company must keep written financial records that correctly record and explain its transactions, financial position and performance, and that would allow true and fair financial statements to be prepared and audited. That duty applies whether the books are kept in-house or by an outside bookkeeper or accountant.

Directors can hand the preparation of the accounts to someone else, but ASIC expects them to read and understand the result, question the accounting treatments and make sure nothing important has been left out. We can walk directors through their statements so they understand what the numbers say.

Good statements start with good records

Financial statements can only be as accurate as the records behind them. Under ATO guidance (last updated June 2026), most business records must be kept for 5 years, and the ATO notes that ASIC requires companies to keep their records for 7 years. Records need to be in English or easy to convert to English.

Clean, reconciled books make year-end faster and cheaper. Our bookkeeping team works in Xero and MYOB, and our business record-keeping guide covers what to keep and for how long.

How it works

1. 1
   Gather the records

   We collect your bank statements, bookkeeping file, loan statements, asset purchases and sales, and the prior year's accounts.

2. 2
   Reconcile and adjust

   Bank, loan and GST accounts are reconciled, and year-end adjustments such as depreciation, accruals and prepayments are made.

3. 3
   Prepare the statements

   We prepare the balance sheet, income statement, cash flow statement and statement of retained earnings, plus any notes your entity needs.

4. 4
   Review with you

   We go through the results with you, explain the key movements and answer questions before anything is signed or lodged.

5. 5
   Lodge and plan

   The accounts feed into the tax return, and for an SMSF they go to the independent auditor. We also flag any tax planning points for the year ahead.

What to bring

• Bank, credit card and loan statements to 30 June
• Your Xero, MYOB or QuickBooks file, or your spreadsheets and receipts
• Sales and purchase invoices, including any unpaid at year end
• Details of assets bought or sold during the year
• Payroll and super records if you have employees
• Last year's financial statements and tax return if you are new to Ross Accounting
• For an SMSF: market values of fund assets at 30 June and member contribution details