Do you understand what a Profit + Loss statement is, and why it’s SO important for your business?
We mean – REALLY understand?
If not, here’s a quick rundown of why it matters, how to use it, and a helpful link if you want to read more about it. (which we encourage you to do!)
First, let’s talk about WHY it is so important to create an accurate (and helpful) P+L report:
Up-to-date bookkeeping data in your financial software
Income and expenses correctly categorized
Accurate separation between COGS and company expenses
Remember, your report will only be as good as the data you put in (garbage in, garbage out!) so make sure your data is right before you run the report.
Once you get it all right, here are the benefits of an accurate P+L. You may be :
Craft accurate business strategies from real data, instead of just guessing at next steps
Set your business up for any financing and borrowing needs you may have in the future
Get you a crystal-clear view of your profit margin on the bottom line
See your expenses in detail – and easily figure out what you cut out to reduce your expenses