Do you understand what a Profit + Loss statement is, and why it’s SO important for your business?
We mean – REALLY understand?
If not, here’s a quick rundown of why it matters, how to use it, and a helpful link if you want to read more about it. (which we encourage you to do!)
First, let’s talk about WHY it is so important to create an accurate (and helpful) P+L report:
Up-to-date bookkeeping data in your financial software
Income and expenses correctly categorized
Accurate separation between COGS and company expenses
Remember, your report will only be as good as the data you put in (garbage in, garbage out!) so make sure your data is right before you run the report.
Once you get it all right, here are the benefits of an accurate P+L. You may be :
Craft accurate business strategies from real data, instead of just guessing at next steps
Set your business up for any financing and borrowing needs you may have in the future
Get you a crystal-clear view of your profit margin on the bottom line
See your expenses in detail – and easily figure out what you cut out to reduce your expenses
However, if you don’t run this report, or the data is wrong, it could hurt your business:
Your business strategies will fall flat, or even overdraw your accounts
You’ll waste money overspending on unhelpful expenses
You won’t have the data you need to accurately price your services for a healthy profit
This is one of the three most important (and helpful) reports for your business – so make sure you both understand it and use it!
The link to the article is in the comments below.
And if you have any other questions about this report – or how to correctly enter the data for it – just reach out! We’d be happy to help!
Resource: https://bench.co/blog/accounting/profit-and-loss-statement/
Kerry Postel – Founder CEO Principal
Abacus Business Solutions
Has Higher National Diploma in Business and Finance, Certified in QuickBooks, Member of American Institute of Bookkeepers, and over 20 years of bookkeeping experience including construction, travel, restaurants, events management, and other various professional services.
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