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Using our Income Statement template and instructions you are equipped to prepare a meaningful statement of your Revenues, Expenses and Income. Profits are of paramount importance to every prospective lender or investor, so you must demonstrate you have a keen awareness of where the money is coming and going.
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As we explained in the previous section, the Balance Sheet provides a snapshot of your business Assets and Liabilities at a single point in time. The Income Statement, however, highlights revenue and expense activities through a specific time period.
For example, the Income Statement could be for the past month, quarter or year-to-date. At the top of all income statement templates it will state the time period. (I.e., “For the (fiscal) year/quarter ended August 31, 2018,”
The income statement highlights the following areas of interest - gross sales, cost of goods sold, expenses, net gains or losses. Use our free Income Statement Template to get started.
As you'll see in the income statement template, it begins with specifics on your gross sales less the costs of goods sold. Next, it subtracts expenses to calculate the net income of your business for the time period involved. In short, the income statement provides a full accounting of how Net Revenue minus Expenses equals Net Earnings (+ Profit, or - Loss)
"Formal education will make you a living; self-education will make you a fortune."
- Jim Rohn
Note: Be sure you do not confuse Revenue for Cash Receipts as they are not the same.
Revenues are credited to the income statement in the same period as when the sale is made, even though you may or may not have received payment at that time.
Cash Receipts are an asset and they are reported on the Balance Sheet as Cash when the money is received. Prior to receiving the money, the business tracks the money owing as Accounts Receivable. The Income Statement template assists you in c
Where the balance sheet is organized and viewed as “left and right”, the income statement reads “top down”.
When viewing our Income Statement Template as part of the business planning process, realize that potential investors are extremely interested in net profits. After all, their business is to make money on their investment, so they will be very specific in their questions to you about how you intend to earn your income and how you will report it.
Read the income statement in the following order:
It should be noted that depending on the type of business, the format of any income statement template may vary. Some businesses choose to break down operating expenses into many sub-categories and some may list out the depreciation expense as its own separate line item.
Regardless of how many categories are used, all expenses must be taken into account prior to listing the net profit.
A formal income statement should be prepared monthly so the business owner can stay informed about the sales revenue, expense and net profit trends of the business.
- Carrie Wilkerson
Courtesy as Business Capital
Countless number of professionals without any special ability in business have succeeded financially by means of a courteous manner. Many commercial businesses owe their success in large part to their ability in selecting employees and sales representatives with pleasing manners and personalities.
"If a man be gracious and courteous to strangers, it shows he is a citizen of the world, and that his heart is no island, cut off from other lands, but a continent that joins to them.”
- Francis Bacon
As you build your business plan be certain to mention the strengths and attributes of your key employees. In addition, you want to provide your strategy for choosing new hires into the organization.
As you grow the business choose new employees through great analysis and care. Courtesy is one of the key essentials in any service or sales-oriented business.
Rest assured, all sales and service skills being equal, the employee to select for advancement is the one who possesses good manners, a fine graceful disposition and a confident presence. Qualities such as courtesy provide one of the best kinds of capital.
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