subject: Profit And Loss Statement: Do You Create Your Own? [print this page] The one thing that will keep any business running is money. Every business need money in order to keep their operations going and in order to get money all business need to be profitable at all times. However, how can companies make sure that they're earning money and not losing money over a certain period of time?
A profit and loss statement is what many organizations use in order to determine if they're on the right course. It's basically a statement that shows a business what expenses it has made, just how much revenue it has earned and how much money it has made or lost during a certain period of time, which could be between a few months to a year.
What sort of business would use a profit and loss statement? Essentially every single company on the planet should have some type of statement that they receive on a regular basis that shows them what their expenses, income and overall net gain or loss continues to be over a period of time. It doesn't really matter if it's a big business or a small one.
Most of the time, very large businesses that have a long history of being profitable will still begin using these statements in order to make certain they stay on the best track. To add to that, really small businesses and the ones that are just getting started should truly use them as well since they are the most vulnerable given that they tend to have the lowest amount of cash.
When should companies receive a profit and loss statement? It really depends upon the size and vulnerability of the company. Large companies that have a lot of money on hand can get away with receiving these statements every quarter or so, however, that won't work out for smaller businesses.
Smaller businesses that are very vulnerable and don't have a lot of money on hand may wish to receive these statements frequently. That is because they're more vulnerable and need to make sure that they're profitable constantly and, if they're not, they have to make some very quick changes in order to show things around.
Where can businesses go in order to get profit and loss statement? This is a thing that businesses are capable of doing themselves, or it can be outsourced to a new company that handles financial matters. Having it done in-house may be alright for some companies, however, it turns out to be unprofitable over time.
A company's best choice is to outsource the financial responsibility of assembling these statements to a company that specializes in doing so. This is because a business that does that will not have to pay employees to find the job done, which saves the organization time and money. To add to that, companies that specialize in providing financial statements will provide a business with the best and most accurate data!
