Free profit and loss template for small businesses

A profit and loss statement is a simple way to summarise your business income and expenses during a specific time, to tell you how much money your business is making or losing. It’s key to understanding and managing your business’s financial health.

A profit and loss statement can be created to analyze and compare business performance over a month, a quarter or a year, and are an effective tool to review cash flow, determine profitability and predict future business performance.

There is no difference between a profit and loss statement and a statement of revenue. Profit and loss statement, profit and loss income statement, and statement of revenue are all terms used to describe the same financial report.

Small businesses use a profit & loss statement in a number of ways:

• Report revenue, total expenses, net income/profit over a specific time period .
• Inform ATO, government & potential investors of your financial position.
• Forecast sales, identify seasonal trends & estimated costs.

A profit and loss statement is an essential report. It is a financial document that provides insight into a business’s financial position over a specific time period.

Businesses use P&L reports to either investigate previous years, current or forecast future performance as a means to inform on:

• Identifying where costs to the business can be reduced.
• Investigating the current financial health of a business.
• The due diligence of a prospective buyer of a business.

To create a profit and loss statement template you’ll need to fill in actual or forecasted figures against each of the below items for each year. If you use estimated costs, you’ll need to label them clearly.

You’ll also need to clearly state on your profit and loss statement whether your figures are GST inclusive or exclusive.

Sales
A sale is a transaction between two or more parties in which the buyer receives tangible or intangible goods, services, or assets in exchange for money. You can forecast sales by looking at previous years, identifying seasonal trends and analysing the market. This includes total sales, cost of goods sold and gross profit.

Expenses
An expense is the cost of operations that a company incurs to generate revenue. You can anticipate cash outgoing by looking at previous years, identifying seasonal trends and accounting for your major expenses. This includes:

• accountant fees
• advertising and marketing
• rent and rates
• utilities (electricity, gas, water)
• insurance
• and more

Total expenses
Calculate total expenses by adding all expenses.

Net profit
Net profit is the money left over after expenses are paid. Calculate net profit by subtracting expenses from sales.

Make sure to download our free profit and loss statement example template to make things easy!

To calculate net income for your small business you need to do the following:

1. Determine gross profit by subtracting the cost of goods sold from your total sales/total revenues.
2. Determine operating profit by subtracting total expenses from your gross profit.
3. Calculate net profit/income or net loss by subtracting interest incurred and taxes from your operating expense.

Our free profit and loss statement example template makes calculating your net income easy – try it out now!