Profit and Loss Template
Our free Profit and Loss template is suitable for both limited companies and self-employed. It is simple and shows the whole year’s figures on one page. It is also known as an Income Statement.
It is essential to know how much profit you make and your overheads. Having all your figures on one spreadsheet makes it easy to spot the difference from month to month. Some businesses will have fluctuations at different times of the year; the template will help you see when they are. It will make it easier to plan for the future.
What is the Profit and Loss Statement or Income Statement?
A profit and loss statement, also called an income statement, is a financial statement that summarises a company’s revenue and expenses over a specific period.
The profit and loss statement can be used to assess a company’s financial health and evaluate the business performance over time. The statement typically covers one year, but you can use shorter or longer periods depending on the needs of the business.
The profit and loss statement begins with business income, which is the amounts earned from the sale of goods or services. This is followed by the cost of goods sold, which include the costs of producing the goods including the product and labour.
The business income less the cost of sales will provide the gross profit.
Finally, you are left with the net profit by deducting the operating expenses.
Why are Profit and Loss Statements Important?
The profit and loss statement is essential to a business because it provides insight into its financial performance. This information can be used to make decisions about how to allocate resources and improve operations.
Additionally, profit and loss statements are used to calculate financial ratios, which are indicators of a company’s financial health. Ratios such as profit margin and return on equity can give investors an idea of whether a company is doing well or if there is room for improvement. Therefore, profit and loss statements play an important role in giving businesses a snapshot of their financial performance.
Profit and Loss in Accounting Software
Producing a Profit and Loss statement or income statement is essential for all businesses. The best way to create a Profit and Loss statement is by using accounting software like QuickBooks or Xero. This software can help reduce the chances of errors and will automatically generate reports based on data from your company’s books.
The report can be exported to a spreadsheet for further analysis and checking of the business’s financial health.
What is Included in the Profit and Loss Statement Template
Sales – Up to four different categories for sales; an example, a computer company may use Hardware, repairs, software and maintenance. Using different categories helps to show the number of sales separated.
Cost of Sales or Cost of Goods Sold – It will include any product costs of an item that you sell and any other figures that relate directly to the sale of an item. An example of this might be that you sold a computer for 400.00, the cost was 250.00, and you hired a subcontractor for 50.00. The figure to enter for the cost of sales would be 300.00
Operating Expenses – These are the general expenses of the business, including rent, wages, post, telephone and any other business expenditure.
How to use Profit and Loss Template UK
Basic Set-up for the Excel Profit and Loss Template
In cell A1, write your business name as you want it to appear.
In cell D1, change the dates to fit your business year. If you are self-employed, you may be using the tax year, so it would be from 6th April to 5th April. The tax year can be found for registered companies by completing a business search on the Companies House website.
In Cell B2, change this to the first month of the financial year. To complete the other months, left-click on the bottom left corner of cell B2 and drag your mouse to the end of M2 and release.
Change sales 1 – 5 to categories that your business uses; you may use one category, in which case, leave the remaining ones blank.
Change Expenses 1 – 15 to the codes, for example, accounting, utilities, rent, stationery, wages and general office.
Save the profit and loss template again, and you now have a copy that can be used each year. When you start, save it as a new file, so you have a template and a file for each year.
You are now ready to start entering your figures.
How to read your Profit and Loss Template
After entering all the figures, the calculations will be completed. All the sales are added together for total sales. The cost of sales is deducted from sales to give the Gross Profit. Expenses are added together and deducted from the gross profit to give a Net profit or loss. Finally, each line is added in the last column to provide a total figure for the year.
Profit and Loss Template Example
The below profit and loss statement example is for a self-employed computer business called ABC Computing using the tax year 6th April to 5th April. Transactions from 1st to 5th April will be added to March at the end of the year.
Total sales for April are 1500.00, cost of sales 250.00 leaving a gross profit of 1250.00. Total expenses 760.00 with a net profit of 490.00.
The total year to date figures are as follows Sales 9250.00, cost of sales, 1300.00, gross profit 7950.00, expenses 3856.00 making a net profit of 4094.00.
Profit And Loss Margin Calculator
Once the figures are entered into the template, it is helpful to check the profit margin using our calculator. Below is the formula for the net profit margin percentage.
Profit and Loss Template Download
By downloading the Profit and Loss template, you agree to our licence agreement, allowing you to use the templates for your own personal or business use only. You may not share, distribute, or resell the templates to anyone else in any way. You will also receive an occasional newsletter with bookkeeping updates, useful information, free resources and offers.
Excel Bookkeeping Templates
We’ve developed free excel bookkeeping templates to help small businesses with their accounting basics. The templates include a cash book, petty cash book and balance sheet. You can also use the fixed asset register to keep track of your company’s assets.
Free Excel bookkeeping template UK – simple cash book.
Return from Profit and Loss template to profit and loss statement.
