Orchid Bookkeeping, Bonnybridge FK4 1BE
TEL: 01324 466101
Mob: 07835 515206
Profit & Loss Report
From the Profit & Loss Report you can immediately see whether you have made a Profit or Loss on your Sales in a particular period.
In order to guide your business in the financial direction you want to take it you need to know where you are making money and where you are spending it. As the Profit & Loss categorises your spending into different areas it can quickly highlight areas where you may be overspending.
If you draw up a Report on a regular basis you will have an early warning of where you are overspending which will enable you to take action to correct this.
If you only draw up a Profit & Loss report once a year then it is already too late to make any changes to increase profits for that year. This could have a detrimental effect on your personal life as well as your business.
The Profit & Loss is a report that any bank or other financier will want to see. You may require a loan to progress your business or to apply for a personal mortgage, if you are overspending needlessly and therefore reducing profits then this could prevent you getting that loan.
It is surprising how many self employed people can tell you that they are doing all right without actually having done any bookkeeping. Sometimes they assume this because they are so busy, sometimes it’s because they feel they have enough cash in their pocket. They are often very surprised at the end of the year when their Profit & Loss A/C is drawn up. “I thought I had made more than that” sometimes pleasantly “As much as that! Does that mean I’ll have to pay a lot of tax?”
The Profit & Loss will not show you how much you owe or are owed or how much your business is worth. The Sales, Purchases, and General Ledgers will contain this information but it is the Balance Sheet which will consolidate this information.
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