The difficult process of starting a business involves a great deal of planning and decision-making; as entrepreneurs must learn to be "jacks-of-all-trades" to some degree. You must choose a business name, a legal structure for your business, create a business plan, raise capital, and make sure you have all of your permits in order.
All of these tasks require time and research. In order to start a business, though, you will need to know exactly how much funding you'll need. Of course, this will vary quite a bit depending on the type of business you choose to start, but usually most business owners will need some financial help at some point during the life of the business.
The following form contains information generally tracked in a profit and loss statement.
Total net sales $__________
Costs of sales $__________
Gross profit $__________
Equipment leases $__________
Loan payments $__________
Total Fixed Expenses $__________
Payroll expenses $__________
Legal and accounting $__________
Total Controllable Expenses $__________
Total Expenses $__________
Net profit (Loss) $__________
Before taxes $__________
Net Profit (Loss) After Taxes $__________
Please remember that this form is only meant to be a sample. Your business may have different or additional information that should be included in your profit and loss statement. If you would like other general information or resources about starting and running a small business, please visit FindLaw's section on Small Business Law.
Using the Profit and Loss Statement for Fundraising Efforts
It is common for a new business to need financing for various start-up costs. Sometimes, however, a business may need financing even after it has been in operation for a year or more; in fact, it may be a necessary step for growth into new or larger markets after achieving some success. When you are seeking financing for your small business, it is a good idea to provide your potential lender with financial statements for your business. Your financial statements can include bank accounts, tax returns, and your profit and loss statement. The financial information you provide will help the lender evaluate your loan application.
Financing Options for Small Businesses
Whether you need financing while starting your business or after the business has been in operation, there are various financing options for small businesses. Small business owners can ask for loans from friends or family members, contribute their own personal funds, finance their business with credit cards, or apply for loans from a bank or other financial institution.
The Small Business Administration (SBA) also offers various loan programs, each with its own eligibility requirements. For example, the SBA offers the 7(a) Loan Program, which is its most common program. No matter where you seek financing, a profit and loss statement can be helpful in successfully acquiring financing for your business.
Getting Legal Help
Generally speaking, creating a profit and loss statement does not require the assistance of an attorney. However, if you have any questions or concerns about your profit and loss statement, or any other aspect of your business, you may want to contact a local business organizations attorney for guidance.