How do I make a profit and loss statement for my business?
Pick a period (a month, a quarter or the financial year), list all revenue earned in it, then subtract in this order: cost of goods sold gives gross profit; operating expenses such as salaries, rent, marketing and software give operating profit; depreciation, interest and tax give net profit. Record income when it is earned and expenses when they are incurred, not when cash moves, and keep the GST you collect out of revenue, since it belongs to the government. A worked example: Rs 10 lakh of sales less Rs 4 lakh cost of goods is Rs 6 lakh gross profit; less Rs 4.5 lakh of expenses is Rs 1.5 lakh operating profit. In Excel, put months across the columns and these lines down the rows, or start from a free template. Better still, keep books in accounting software such as Zoho Books (a free plan for micro businesses, Standard at Rs 749 a month billed annually) and it builds the P&L from your entries, which your CA then turns into the annual accounts.
A line-by-line guide to how an income statement (P&L) is built: revenue, cost of goods sold, gross profit, operating expenses, depreciation, interest, tax and net profit.
HBS Online's plain explanation of what goes into an income statement and how accountants prepare one from the trial balance, with the ratios to read from it.
The most accessible book for non-finance founders on reading a P&L, balance sheet, and cash flow statement. It demystifies the three core statements without requiring an accounting background.
Accounting software made in India with GST invoicing; it produces the profit and loss statement from your entries. There is a free plan for solopreneurs and micro businesses, and Standard is Rs 749 a month billed annually (Rs 899 monthly).
