For example, many banks require profit and loss statements using the multiple-part method if you're applying for a small business loan.The following Excel spreadsheet provides a template of a typical Profit and Loss statement (also known as a Statement of Income), which may be useful for your small business accounts. If you're preparing the profit and loss statement for a third party, they may dictate the method you should use and the figures you'll need.The multiple-part method makes more sense if you have an inventory-based business such as a retail store.Adding your other income minus other expenses to your net operating profit gives you your net profit before taxes.
Your sales minus your selling and administrative expenses is your net operating profit.
Your organization should make sense and be easy to follow.Your data will go in the corresponding cells. If you've decided to create your own spreadsheet, organize it with your income and expense entries as the rows, and your time periods as the columns. For example, if you were experimenting with different methods of advertising and marketing, and you want to analyze how your business's income changed under each method, you might separate those out, having separate categories for internet advertising and television advertising.Ĭreate your rows and columns.On the other hand, if you're creating a profit and loss statement for internal analysis, you may want to itemize your expenses to a greater extent.For this reason, you typically want to use general categories such as "advertising" or "office expenses.".If you're preparing a profit and loss statement for a third party, you probably don't want them to have explicit details about your business and the expenses of your operation.How you categorize your operating expenses will depend to some extent on whether your profit and loss statement will be used internally or is being prepared for a third party, such as a potential lender. Financial records are important, so if you run across any gaps in your record-keeping while you're gathering income information to complete your statement, make a note to fix the problem as soon as possible.Ĭreate general categories for operating expenses.You also want to keep non-operating income, such as capital gains, separate from your operating income.Divide your income into general categories so you can determine how much money your business is bringing in for each avenue of your operations.However, keep in mind that if you haven't recorded income, you'll not only have trouble creating this statement, you'll also have problems when you're preparing your taxes.If you don't have a bookkeeper or use accounting software, gathering these documents may present a challenge.To prepare your profit and loss statement, you'll need raw figures for all income your business has earned during the period the statement will cover, including any gains from assets. Gather documentation of sales figures and other revenue.