Talking Cents

Melbourne small business accountant: all you need to know about a profit and loss statement

Profit and loss statement is a simple financial report tells you, small business owners a lot about your business and can be useful in decision making.

Your P&L tells you how your business is growing, or not and that piece of information, you are able to make better decisions with fact and numbers. What exactly is it? It is a financial report that tells you your total revenues after comparing with total expenses in a period of time.

The simple equation is to calculate your profit or loss is taking revenue and subtracting your cost of goods sold, operating expense and taxes.

Read on for the definitions of every component. In simple terms:

Revenue is whatever you’ve sold in a period.

Cost of good sold is what you’ve spent to “make” the goods or services that you are selling. A typical example is your labour cost.

Operating expenses is the costs that you incur for operating your business, which is your utility bills, rent and wages etc.

Taxes are the different taxes you paid for your business within a given period.

Based in Sydney, we are a group of professional accountants who are specialised in small businesses. At mas, we strive to serve our customers with services beyond their expectations. Do not hesitate to contact us for any accounting services.