On Oct. 22, Danea Ramos, Director of the Business Resource Center, held virtual office hours for entrepreneurs to learn the basics of a profit and loss (P&L) statement. She was able to help four entrepreneurs understand what a profit and loss is, what it means to do a health check and the benefits of a P&L when it comes to tax season.
Four main things to know about a profit & loss sheet:
1) Track your income/sales weekly
2) If you have a product, make sure you keep track of your Cost of Goods Sold.
3) Your Gross profit is based on your sales minus the Cost of Goods Sold. The formula is: Total Sales – Cost of Goods Sold = Gross Profit
4) Net profit is Gross profit minus operating expenses which include salary, rent, utilities, etc. anything that makes your business stay afloat. The formula is: Gross Profit – Operating Expenses = Net profit
Knowing what you make can help you keep your business in business!
If you would like a free P&L template and to meet one-on-one with CAJC staff, sign-up fill out a business needs assessment.