The profit and loss statement is one of your company’s most important financial documents, and as such, it’s essential that you know exactly what you’re doing when it’s time to produce it. If you’re not using accounting software, which can automate the production of a profit and loss template, then you may need to create your statement by hand. Fortunately, there are plenty of online profit and loss templates for UK businesses to guide you in the right direction. Find out a little more about producing a profit and loss balance sheet template right here.
What is a profit and loss statement?
A profit and loss statement provides a top-line overview of your business’s revenue and expenses – helping you determine whether you’ve made a profit or a loss. Profit and loss statements (sometimes referred to as a P&L or a profit and loss account) are a critical financial document as they offer a great insight into your financial health over a given period. This means that you can compare your performance across different accounting periods. Furthermore, you’ll need a P&L to calculate several vital financial metrics, including gross profit margin and net profit margin.
What should you include in your profit and loss template?
Several crucial pieces of accounting data need to be included in your profit and loss statement template, including:
Revenue / sales
Gross profit / profit margin
Operating expenses (OPEX)
Typically, profit and loss templates are used for a specific period, i.e., one month, one quarter, one year. So, now that you know what you’ll need to get started with your profit and loss account, here’s our profit and loss template for UK businesses.
How to create a profit and loss statement
Essentially, your profit and loss statement needs to show all your business’s sources of income and expenditure. Here’s a step-by-step guide to creating the profit and loss statement template:
Firstly, choose a time frame. Anything less than a month isn’t likely to provide you with meaningful data.
Next, list your business’s revenue across this period.
Then, calculate your expenses. You should separate your direct costs (i.e., COGS) from your indirect costs (i.e., depreciation).
Now, determine your figure for gross profit by subtracting direct costs from your total revenue.
Finally, you need to subtract your total expenses from your gross profit. This will indicate whether your business is making a profit or a loss.
So, there you have it – completing a profit and loss template should be relatively simple, assuming that you have all of this data at hand.
Example profit and loss template
Want a little more information on how to create a profit and loss balance sheet template? Here’s a straightforward example that you can use as a guide:
Profit and loss statement
For the period [Period Start] to [Period End]
Total Net Revenue
[Figure for Revenue, i.e., £500,000]
[Figure for Direct Costs, i.e., £150,000]
[Figure for Gross Profit, i.e., £350,000]
[Figure for Expenses, i.e., £100,000]
[Figure for Net Profit, i.e., £250,000]
Using the example above, we can see that this business is making a sizeable profit. Many other profit and loss statement templates are available online if you’d like to do a little more research. For example, Microsoft Office has a range of different templates that you can use for your business.
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