In order for a business owner to analyze their business’ ability to generate income, they must have an Income Statement or Profit and Loss Statement. Income statements are reports that compare sales to expenditures and the net profit after all expense have been accounted for.
A properly prepared income statement report will include:
The statement will include all income for a given period (e.g., month, quarter or annually), by subtracting all expenses from revenue to determine profit or loss for the period. Since all businesses are unique, some require more advanced levels of reporting than others. Generally, our small business accountants recommend businesses in the early stages receive monthly statements. As a business ages and expenditures stabilize, income statements can be reduced to a few per year or annually.
Over time, the income statements will help determine future operating performances to help the company strategize for expansion.
By managing an income statement businesses can:
Working with an experienced small business accountant will help your business survive the volatile first years of its existence and prepare you for years of success. Our fantastic accounting team is here to help you along the way. Give our team a call today to schedule a consultation for your small business accounting needs.