Steps
Just fill the form and our CA's will contact you regarding the P&L and Balance Sheet Certificate.
- These two financial statements can seem very similar since they both include business revenue, expenses, and the business’s profits are reflected. The main difference between them is that the P&L statement shows a business’s actuals for a certain period of time, like a quarter, and the balance sheet reflects everything a business owes and owns at a set point in time.
- The balance sheet is meant to reflect the big picture that includes long-term investments. The P&L statement is a quick summary that discloses whether or not the business is profitable. It reflects net income for the period in a simple way, whereas the balance sheet tends to reflect the overall value of a business.
- While these two financial statements do have their differences, both show the health of a business and can be used for purposes like creditor and investor interest. It’s important to understand which is best for certain purposes, so you present the most accurate accounting information about your business at the right time.
- Sometimes you may not have the knowledge or bandwidth to take the time to create these financial documents yourself. There are options for financial and business software you can use that does a lot of the work for you, or you could use a simple spreadsheet. But, remember that accuracy is a must in these records, so you must pay close attention to detail and review them carefully to ensure everything is correct and up to date.
- Another avenue to consider is working with a financial professional who can help review your records and put the right practices in place to ensure efficiency. The team at Franco Blueprint is ready to help you with a variety of processes, like setting up your business, managing and preparing your taxes, and automating processes like accounting.
- We help you reduce your financial risk and create all the necessary documents, so you can focus on other parts of your business, like client support and long-term growth.
Revenue is reported first on a profit and loss statement for small businesses and includes all income items. This entry on the P&L may be referred to as sales, gross receipts, fees, or any other term to describe the company's operating revenue. Operating revenue is typically broken out from non-operating sources of income, like interest.
2. Cost of goods sold (COGS)
A company that sells goods must figure the cost of goods sold (COGS). This is essentially the cost of inventory or materials used to create products, which is then subtracted from the sales to determine the actual revenue (gross profit) from the sales.
3. Expenses
The expense portion of a profit and loss statement for small businesses encompasses any expenditure made to operate the business. These can include:
- Advertising costs
- Employee salaries, benefits, and payroll taxes
- Interest expenses
4. Gross profit
Gross profit is the difference between the revenue or gross receipts and the cost of goods sold. If the company is a service business without inventory, then the gross profit and the gross receipts are the same amount.
5. Net profit or loss
After calculating any taxes due and subtracting them from pretax income, the net amount will equal a company's profit or loss for the period. When trying to compare companies in different industries and tax situations, or if exact numbers aren't yet available, net profit or loss is often equated to the earnings before interest, taxes, depreciation, and amortization (EBITDA).
