Is My Business Actually Making Money?

By Marketbox Tax Advisory · September 8, 2026

Short answer: Start by asking what period and accounting basis the report covers. Compare revenue with direct costs to understand gross profit, then examine operating expenses and the bottom line. Compare like periods and explain large changes. A positive net result is useful, but it does not tell you how much cash is available to withdraw.

Which profit number should I look at?

Start by asking what period and accounting basis the report covers. Compare revenue with direct costs to understand gross profit, then examine operating expenses and the bottom line. Compare like periods and explain large changes. A positive net result is useful, but it does not tell you how much cash is available to withdraw.

What does each financial statement tell me?

The P&L summarizes income and expenses over a period. The balance sheet shows assets, liabilities and equity at a date. The cash-flow statement explains changes in cash over a period. Request consistent periods and reconciled balances. A report exported from software is not automatically an accurate report.

Why can profit rise while cash barely changes?

Consider this hypothetical example: beginning cash is $20,000; the business earns and collects $10,000 after paying its operating expenses; then it pays $4,000 of loan principal and distributes $5,000 to the owner. Ending cash is $21,000. The $9,000 difference is explained by principal and distributions, not an unexplained loss. This simplified example assumes no other cash movements.

What should I investigate when the numbers look wrong?

Ask about overdue customer balances, unrecorded bills, inventory, equipment, credit cards and loan balances. Under accrual accounting, sales may precede collection. An equipment purchase may be capitalized rather than immediately expensed; tax and book treatment can differ. Ask the preparer to explain unusual negative balances, old suspense items and large unexplained adjustments.

How much can I safely take out?

Do not use either net profit or the bank balance alone. List upcoming payroll, vendors, debt payments, tax reserves and planned investments. Review restrictions and the entity-specific treatment of compensation or distributions. Build a short cash forecast and agree on a reserve. There is no universal percentage every owner can safely withdraw.

What should my monthly meeting produce?

Leave with three answers: what changed, why it changed and what action follows. Use a one-page worksheet: revenue ___; gross profit ___; net profit ___; beginning cash ___; ending cash ___; largest cash movements ___; upcoming obligations ___; action/owner/date ___. Ask for an explanation you can repeat in plain English, not merely another dashboard.

What should I review next?

Use the companion checklist below to identify missing information before your advisor meeting. Mark each item Ready, Missing or Not applicable; assign a responsible person and a follow-up date. Completion is preparation, not proof of eligibility or compliance.

Next step: Request a complimentary, no-commitment introductory call through https://911taxplanner.com/contact/ to identify the appropriate review. Do not send tax returns or sensitive identifiers through the public contact form. Se habla español.

Primary references

https://www.sec.gov/about/reports-publications/beginners-guide-financial-statements

General education—not individualized tax, legal, accounting or investment advice. Eligibility, deadlines and outcomes depend on the facts and applicable rules. No professional relationship is created without an engagement agreement.