This article is for educational purposes and does not constitute legal, employment, or tax advice. For specific advice applicable to your business, please contact a professional. The information is current as of the publication date only, and the laws (and associated agency and/or judicial interpretations) on the topics discussed could change at any point in the future.
According to a 2020 Facebook State of Small Business Report, 28% of small businesses owners said the biggest challenge they would face over the next few months is cash flow. There are several forms like a balance sheet, cash flow statement, and profit and loss statement that can give you different views of your business’ cash flow and in turn, clearer insights into its financial health. A profit and loss statement or a P&L statement is a financial report that shows the amount of profit or loss your business has experienced over a specific amount of time. This time could be a month, fiscal quarter, or year.
What’s included in a profit and loss statement?
- Cost of goods sold
- Other income and expenses
- Net income
Every business will have a slightly different P&L statement depending on type of business and time period of the report. Whether your business is profitable, or operating at a loss, this statement can help you make decisions about how to better position your business moving forward.
We’ve partnered with our friends at Bench, America’s largest professional bookkeeping service for small businesses, to bring you a profit and loss template that you can download, input financials specific to your business, and help you see a clearer picture of your profits and losses.
What You’ll Learn:
Better manage your cash flow
Using tools like a balance sheet, cash flow forecasting template and a profit and loss statement template will give you different financial views of the cash inflows and outflows of your business. In turn, this will give you a more holistic look at your business’ financial health.
Prepare your business before seeking a loan
A profit and loss statement can be used to seek a loan, giving lenders a way to evaluate your business’ income against other expenses and debts. This statement is a way to prove business viability.
Organize your finances ahead of tax season
When preparing a business tax return, profit and loss statements could make filing more seamless. If your business operated at a loss, speaking with a tax professional and having this statement on hand could help them identify any opportunities for potential tax relief.