BWA means business evaluation. It shows whether a company is making profits or losses. Via BWA, entrepreneurs receive an overview of sales, costs and key financial figures for the company. This makes the BWA one of the most important controlling tools for entrepreneurs. The BWA is based on the accounting data for the past month or quarter. You can either do the creation of the BWA yourself with suitable accounting software or you can commission a tax advisor to do so. We’re talking about it on the blog as you may have noticed it has become a requirement for some forms of government financial support during the Corona crisis.
Definition of BWA - what is it?
The abbreviation BWA stands for business evaluation. An entrepreneur uses this to represent the cost and profit situation of their company. At first glance, it seems very similar to a balance sheet, at least as far as the definition of a BWA is concerned. However, in contrast to the balance sheet, this is not drawn up annually, but monthly. With this, you always have an up-to-date overview of the economic situation of your company.
From a legal point of view, however, there is no obligation that provides for the creation of a business analysis, which is why many companies do not read the BWA. Nevertheless, you should create this every month to keep an eye on the development of your freelance or self-employed operation.
Who should prepare a business analysis?
A business analysis is mainly prepared and used in small and medium-sized companies. With these companies, it is particularly important, in comparison to large companies , to constantly monitor their economic success and so to be able to continue growing. In order for a company to be able to prepare a BWA, the accounting obligation of the company concerned is required.
Finally, the business evaluation is based on the data from financial accounting. The BWA is usually created by a tax advisor or auditor, usually with the help of DATEV. This is especially important in the 2020-2022 tax season, with changes coming in and of course, the Corona crisis pure ruining lives.
What is the purpose of a BWA?
A BWA is an important tool for any business to control. It is therefore advisable to carry out this evaluation on a regular basis. So you can check the development of your company at any time. Above all, with the business analysis, you have the advantage that you always have all the current data about your company in compact form. Of course, this brings additional work, but it also has many advantages. For example, you can use the business analysis:
- Check and plan your income tax prepayments
- Check whether an investment deduction is an option for you
- Present the current figures for a discussion with your bank, e.g. for a loan
- A BWA is very important, especially for banks. In addition to documents such as your balance sheets, they also want your business evaluation to be available during loan negotiations.
With the data from financial accounting, an ideal business analysis can be created. As soon as your company meets the GoB guidelines (principles of proper accounting), it can create a BWA from the existing financial accounting data. Either a tax advisor can be commissioned for this, or you can create your BWA yourself. If you have accounting software, you can also create your BWA yourself with a few clicks.
But you can also use an Excel template to create your own BWA and save the costs of an external tax advisor. You can find numerous templates for this on the Internet that you can download for free. With the help of these forms, you can create an excellent overview of your business analysis.