Sign Michigan Banking Profit And Loss Statement Easy

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hello this is Antonina gear with simplistic financials and welcome as promised this is another part of the money secrets for service based owners I think it was the third part that I did a few weeks ago on the financial statements that every service based entrepreneur should know and half last week I showed you a sample of a balance sheet that I created in Excel most often your accounting system will have this on these financial statements but if you don't have an accounting system another way to go is with the the going with Excel excuse me so let me do this screen so it's a little bit bigger for you so here's today what we're gonna do is the income statement and what the income statement a lot of most entrepreneurs are familiar with the income statement but you might hear it in terms of a profit and loss statement or a P&L or your statement of expenses in revenue or a statement of revenues and expenses expenses those terms are interchangeable so but for this purpose of this recording or video I'm gonna refer to it as an income statement or a P&L so what the income statement is as I stated in one of the articles in the money secrets for service based entrepreneurs article on my blog that's wwm plastic financials comm slash blog the income statement really is a document for your business that shows your profitability it's basically a list of things that you can see of your income and expenses activity that's going on in your business operations that covers a period of time so as you can see here this is showing for the period ending January 31st you'll see income statements structured differently that depends on your accounting system it depends on your business it depends on how you like to see things so the one I have here that I constructed I have it in sections with the revenue on top and then you'll go on down revenue just for in case you don't know revenue is the income that your business brings in based on a number of services and products that you sell so revenue and sales and income sometimes is also are used interchangeably as well so here I have the revenue section I have them the period over here and I'll talk about this area here in a few minutes so for revenue I just have products slash service one it's just depends on if you sell a product or service and I'm just gonna kind of show you how it's done okay so like for any service based women entrepreneur most of us some of us we do consulting we do consultations that's consulting excuse me we do coaching we do seminars we do trainings we have info products all these things that generate revenue for our business so I'm going to put just a few in here just to give you an idea okay so I'll do coaching consulting training speaking which is very popular and I'll just keep it even all the way well no I won't get some variety going here so we can have a few different things okay actually let me bump this up because you know we're financially savvy entrepreneurs were when and we're doing things big right so I'm gonna bump this stuff up here a little bit more okay so each I have the amounts of revenue that was generated for the month of January so for coaching it's $5,000 for consulting I brought in $5,000 for the month for training you're bringing in six thousand dollars a month and for speaking you're bringing in two thousand dollars a month so based on all the type of services and products you you use third for your clients or customers or that you do in your business for the month of January your total revenue total income that you bring in is $18,000 okay what I have here is a percent of revenue why is this important Anthony you know well it's important because you can look here and actually see what service or product is generating the most revenue so you can see here training generates about thirty three percent of your income or revenue I would say yourselves and coaching and consulting are the same and they do about twenty eight percent of this eighteen thousand dollars that you generate every month so you and I being financially savvy entrepreneurs that we are and we're always thinking of ways to bring in more revenue into our business will say hey you know it looks like people are really either they're really liking the the training or it's popular or it could be that your training is just a higher-priced service so this percentage of revenue if you can excuse me this percentage of revenue column just kind of lets you know how you're bringing how much of how much revenue each product and service is bringing in to you and to your business this also helps for further analysis to help further your business okay the second section here is your expenses section and you'll hear this refer to as cost of your business things of that nature so basically what expenses are they are dollars or costs that you've given out in your business to run your business that can be for your suppliers any vendors you may have if you have employees if you're given to your taxes any bills that you may pay any coaching and other professional services that you participate in during that period of time which for us this month is in January so owners withdrawals that's what I just put here you might see it called something different for different companies but it depends on you what you want to call it but if you are a solopreneur you cannot call it salary at least not for yourself because if you do that implies that you should be paying some sort of employee benefit tax and you don't really want to get into that not employee benefit I'm sorry payroll taxes and you really don't want to start getting into that just yet as a solopreneur or if you have an LLC the best thing to do is to call it owners withdrawals or you can say owners compensation or something like that so let's just say you this month you paid yourself $10,000 you don't have any employees so salaries and employee benefits won't matter you may have about to $200 a month in insurance that you're carrying about $200 a month for January for supplies you might have bought a computer things that nature let's see you're part of some monthly group coaching memberships we can put 500 here and you invest in coaching every month let's say $1,000 okay your total is twelve thousand nine hundred dollars for expenses okay as you can see here I also have a percentage of revenue because I also want you also want to know what costs are eating up all of the profit or not all the profit but all of the revenue that you're bringing into your business in this case you are paying yourself at least 56 percent of your of your your revenue that you bring in some may say that's a little high it depends on on you and your business and if your business can sustain that level of you being paid if you don't have a lot of expenses it may be okay okay but it's totally up to you and how you want to run your business so as a total for the month for expenses you have twelve thousand nine hundred dollars so here's something that I call total revenue over expenses some may say net income net profit before you take out other financial items I just put that there just for the sake of making it a little easier all it says is after I bring in my money after I pay all my stuff this is what I have leftover this is five thousand one hundred dollars this is before I pay any taxes due any savings anything of that nature any reinvesting in my business this is what I have this five thousand one hundred dollars here okay some income statements stay right here and they don't factor in taxes contingency which I'll talk about that later or any savings so at this point you might stop here and may call it net income or you may hear it called net profit you may even hear it called bottom line okay I'm just gonna take it back to what it was so that's $5,100 okay oh let me go back up here so you can see here I'm being silly today and as you can see here there's twelve thousand nine hundred dollars I mean sorry yes twelve thousand nine hundred dollars expenses it also means that your expenses are seventy-two percent of your revenue okay and if you don't understand that feel free to send me an email at Antonina at simplistic financials com if you have any questions about this okay now here's another section that I like to put in and with my years of working in the finance industry and working in big corporations excuse me we I've seen it done this way and I actually like this way because there are other items that happen in your business that may take away from your profitability but it really has nothing to do with the daily operations of your business so there's things like taxes because you know you're gonna have to pay some sort of taxes there's a contingency which is what I call contingency which some may call a cash reserve is some type of reserve and all it is is just something that you plan to put away for you know for a rainy day at college or rainy day fund or whatever but it's contingency or your reserve some people call it and all I did was took about three percent of total expenses or you can do revenue however way you feel best doing it or maybe you have a CPA who may advise you to do it another way but this is just the way I do it so that I know this amount here this contingency is three hundred and eighty seven dollars that I want to put away every month and a interest-bearing bank account or what had to you something that's going to allow it to grow but it's going to be set aside and used in case the unexpected happened and as you know in business there's always something that comes up that you might not have expected and you didn't plan for in your budget and then of course I have business savings because of course at some point you want to be able to let's see to reinvest in your business at some point so after total financial items other financial items it's one thousand two hundred and eighty seven dollars so that subtracted from this this here gives you your bottom bottom line if you will and that's where I put it actually the net income or loss all this number says is that your income your net profit your bottom line for the month of January was 3813 dollars what this means is that out of all your revenue after you paid out everything you need to pay for in the month you're expecting this much profit this means that you actually make use of your revenue if you will you didn't go over or you didn't overextend yourself in this month okay so your bottom line is three thousand eight hundred and thirteen dollars and I also have as you can see here what percentage of revenue that is so that's it for the income statement again the income statement is where you want to look at your profitability and see if you're profitable I would suggest maybe starting off doing this once a week if that's too much for you definitely do it every month you always want to know if you're gonna be profitable the reason I say every week is because you can always if you're looking at it every week and things start to look a little weary or like you may not be profitable for that month you actually have some time to correct it by bringing in more revenue and things of that nature okay so that's it again for the income statement and stay tuned because I'll be springing in the next one soon and that will be the cash flow statement if you have any questions with this actually I'm going to be coming out with a product soon launching a product where you would have this as a starter kit this income statement along with other statements and some other goodies to help you learn these financial statements for your business so thanks for watching and I'll see you around with cash flow statements have a great day