A profit and loss statement tells how much your business makes or loses. Use our template to set start a profit and loss statement, so it can help you manage your business sales.
The Importance of Profit and Loss Statements
A profit and loss (or income) statement shows sales and expenses. It tells how much profit is made or how much is lost. Usually, this is completed every month, quarter, or year regularly.
Use this to help develop sales targets and a reasonable price for your goods or services.
Completing your profit and loss statement
For each year, you must fill in actual or forecasted figures against each item below. Label your estimated costs clearly if you are using these.
You'll also need to clearly state whether your figures are GST-inclusive or exclusive on your profit and loss statement.
Sales
Sales are transactions between two or more parties where value is exchanged. The buyer receives goods (tangible or intangible), services, or assets by giving money to the seller. Sales can be forecasted. It can be done by reviewing previous years' data, identifying seasonal spending trends, and analysing the market. This can include total sales, cost of goods sold, and gross profit.
Expenses
An expense is a cost a company pays to generate profit. Cash outgoing can be anticipated by reviewing previous years' data, identifying seasonal spending trends, and accounting for significant expenses. This includes:
- accountant fees
- advertising and marketing
- insurance.
- rent and rates
- utilities (electricity, gas, water)
Total expenses
Total expenses can be calculated by adding all expenses.
Net profit
Net profit is what's left after expenses are paid. This is calculated by subtracting expenses from sales.
