The P&L is the document used by the IRS to assess taxes on your company’s profits. Those profits are your net income, or funds left after accounting for taxes, employee costs, and operational overhead. If your accountant uses any of the following terms, she is referring to a P&L:Ī P&L consists of one basic formula: Sales – expenditures = profits. Other NamesĪccountants sometimes use other terms for the same document. It is a financial snapshot of your company during that month, quarter or year, giving you insight on what your business is doing right and what needs changing. Protect Yourself: Review Your P&L RegularlyĪ profit and loss statement (commonly called a P&L) is a financial document that measures your expenses and sales during a certain time period.Getting Started: Creating a Profit and Loss Statement.Let’s take a look at what a profit and loss statement is and how to use it to make effective business decisions. Even if your entrepreneurial spirit isn’t particularly geared toward financial accounting, it’s a crucial part of your business’ success or failure.įortunately, there are P&L templates available, and accountants are very accustomed to helping businesses set one up. ![]() ![]() Your hard work is coming to fruition and your business is going live. You’re excited about the creation of your business. No matter what items you sell or services you provide, a profit and loss statement (P&L) is essential and required by the Internal Revenue Service.
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