Profit & Loss Statement

Small business start up information

What is a profit and loss statement?

Essentially a profit and loss statement measures the profit or loss of a business at a specified date. A profit & loss summaries the revenues for a period and subtracts the expenses incurred for the same equivalent period to arrive at the profit or loss for the business. 

Can I prepare my own profit and loss statement?

You can prepare your profit and loss statement yourself.  However if your business is of a reasonable size and the process is more involved, you might need a qualified accountant to help you prepare and, if necessary, audit your accounts.

Do all businesses have to produce formal profit and loss accounts?

No.  If you are a “Limited (Ltd) company”, by law you must produce a profit and loss account for each financial year.  Self-employed, sole traders and most partnerships are not required to create a formal profit and loss account.  If you are self employed, sole trader and or an exempt partnership you will still need to total all your income and expenses for each financial year, for the purposes of completing and submitting a tax return.

There are a number of benefits to producing a formal profit and loss statement.  If you are looking to grow your business, or need a loan or mortgage, for example, most institutions will ask to see three years' accounts.

To help you understand what goes into a Profit and Loss Statement we have put together a sample Profit and Loss Statement with explanatory notes and information.

Download templates 

Sample Profit & Loss Statement - with explanatory information (PDF).

Sample Profit & Loss Statement - excel templates, including calculations.
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