As a business owner, having real-time information on your finances is imperative. Business reports like profit loss statements can help you assess your net income, make better business decisions and stay miles ahead of your competitors.
If you are looking forward to taking accounting into your hands, you must invest in financial reporting software. It can provide you with a plethora of accounting report templates, including a profit and loss statement template.
This blog will help you understand the Profit & Loss Statement better, how to generate it online with online accounting software for small businesses, and the benefit of using a profit and loss statement template.
Profit & loss statement (P&L)- what does it signify?
Usually, these statements denote if a company is making/losing money in a given time period and why. In addition, it records the reported company income and expenses to help you develop a better understanding of the same. Here are some parameters included in a Profit and Loss statement.
This function is used to denote the total sales made or calculate the turnover during the accounting period. It includes both the revenue your firm earned from usual business activities and also the revenue generated from long-term business assets.
2. Cost of goods sold
This denotes the price of goods and services offered by your company.
3. Gross profit
Gross Margin or Gross Income helps you calculate the net revenue by excluding the cost of sales.
4. Operating expenses
Administrative expenses required to run a business come under these expenses.
5. Operating income
The amount earned by your company before calculating taxes, interest, depreciation, and authorization. You can subtract your operating expenses from your gross profit to get the correct figure.
6. Net profit
The total money you have earned after deducting expenses. To calculate this, all you will need to do is minus expenses from your gross profit.
Now that you are clear about the terms related to profit and loss statements and financial reporting software let us know its benefits.
Benefits of having a profit and loss statement
P&L is the most used financial statement or business report by small and large-scale businesses. This is because it gives out actual information about the net loss and profits generated by a business.
- Lets you address operational inefficiencies. You can calculate your direct/indirect incomes expenses with ease.
- Helps you exercise control over indirect expenses and get related information related to these.
- Let’s analyze the tax you need to pay for the profits you have made.
- It helps you track business performance, compare it to previous reports, and achieve business objectives easily.
- You can also use it to base your future decisions and even analyze if taking a bank loan will be good or not.
How to generate P&L statements using online accounting software for small business?
Here are the steps you will need to follow to generate a profit and loss statement.
1. Choose a format
Financial reporting software doesn’t limit you to a single profit and loss template. Instead, you can choose from multiple ones and then reach a final decision.
2. Download the template
The next step is to choose and download the template.
3. Enter revenue
The next step is to add your revenue to the designated field. For this, you will need to calculate the revenue your business has earned. This can be done by obtaining current balances from your general ledger. You will also get to know your cash and current accounts receivable balance.
If you are creating a statement for 30-days, you will need to add all the revenue received in the stipulated time, even if your business has collected the revenue or not. At the same time, if you are running it for a quarterly period, you need to add the revenue received in that three-month time frame.
Your revenue can be from selling products and services or even selling a new printer to your neighbor next door, make it a point to include all of them.
4. Add your expenses
In this step you will need to add the cost of materials and supplies you used to make them. If you are offering services, you will also need to include the cost of your time and your employees.
5. Calculate net income
When it comes to calculating the net income, you will need to deduct your expenses from revenue. Once you have done that, the next step is to add it to your profit and loss template.
6. Determine profitability
The next step is to get an account of all your operating expenses. These include rent, equipment, utilities, travel, payroll, and postage. Besides, if you have any additional income, you should include these here.
Once you add them to your operating profit, the total will come to earnings before taxes, interest, depreciation, and amortization, popularly known as EBITDA. You will then need to add it to your profit and loss statement template.
7. Calculate taxes
The last step is to calculate taxes and add them to your profit and loss statement template. Once you are done with all these, you can check all the functions again with your financial reporting software, and you will have the report with you!
Types of business reports offered by Moon Invoice
Moon Invoice has been carefully designed to cater to the needs of small businesses and startups. You will be able to streamline your finances, keep a check on inventory, and access the best reporting features.
Besides, it also lets you fulfill your tax-related needs and get access to the best accounting integrations. You can easily calculate profits and losses and leverage the power of analytics with this online accounting software for small business.
Moon Invoice can also help you create business invoices and get item-wise reports. Here are some of the business reports that Moon POS offers.
Need to Download Profit and Loss Statement Online?
1. Order aging report
This report summarizes all the receivables from due from customers at a given point in time. It even breaks them into different categories based on the days since the respective invoices were raised.
2. Order report
An order report is a list of all products sold during a time period. It even includes the buyer information you will need to fulfill orders. However, it does not include personal entails like their billing address or credit card information.
3. Customer report
A customer report helps you identify trends and get access to insights related to customer experience. It can include a variety of metrics that can help you gauge the performance of your customer support team.
4. Purchase order report
These reports can help you gain knowledge about your company’s purchase order activity, monitor transactional activities, and forecast trends. You can even choose to see the advanced pricing details in this report.
5. Payment report
This report gives an account of the pending and clear payments by clients.
6. Stock report
The stock report includes details about your company’s inventory and the goods and services you have stocked. You can use it to keep your inventory in check and make purchase decisions accordingly.
7. Sales report by product
The sales by product report gives you an account of sales information for each product sold. You will gain access to the following information:
- Cash flow equivalent
- Revenue generated by various payment methods
- Total sales made
8. Profit report by product
Similar to the sales report by-product, this report gives you an account of the profit made for each product.
9.Profit & loss
Gives you information regarding the profit and losses made by your firm in a given period of time. Your online accounting software for small business can help you generate these statements and derive insights to better your business processes.
10. Tax report
It includes all the taxes your firm is subject to. You must analyze this report thoroughly to never miss out on tax deadlines and deductions.
11. Expense report
Includes all business and other relevant expenses done for achieving your firm’s objectives.
This was all about how financial reporting software can help you with business reports and simplify your work by letting you access a profit and loss template and other parameters in just a few clicks. If you are still looking for the ideal online accounting software for small business, you can always contact us at firstname.lastname@example.org or +1-805-491-9393 for more information.