26 Sep How to Manage Profit and Loss
In order for a business to be successful and to provide better products or services, it must be able to make a profit. Of course, any business that has a profit is sure to have a loss, but the main goal is to keep the profit higher than the loss.
So what is the profit and loss in a company? According to Intuit “A profit is an amount of money that is more than its original price while a loss is an amount of money that is less than its original price.” Or in layman’s terms, profit is making money while the loss is losing money. In order to properly manage your business’s profit and loss, you must be able to track how much income is received and how much it costs to run your business.
Follow these tips below and get on the path to managing your business’s profit and loss the right way!
As the owner of business, you must sit down with your bookkeeper or your accounting firm to compare your current profit and loss statements to previous years. Ideally, you should go back a number of years to compare, but if you are a new business, you may not have this much data.
Your bookkeeper or accounting firm should be able to give you an income statement. Consequently, this statement should allos you to view the profit and loss between the previous years. Keep in mind that some things will naturally raise in price due to inflation. Your cost of rent may not be the same it was 2 years ago, and if your sales have increased your employee costs may have raised as well.
As a business owner, who does not have a knack or passion for accounting, may not be able to understand the information off the bat. The person that is providing this data, bookkeeper or accountant, should be able to explain it thoroughly to you. They should also be able to answer any questions that you have regarding the information they provide.
Review Your Profit and Loss
After you have met with your accounting firm or in house bookkeeper, you should discuss and review this data with an analyst or advisor. Keep in mind that even if you are managing your finances well, your company may still not be hitting the desired mark. At this point your advisor can help you determine how to save money and where to cut costs.
Managing all of your company’s finances on your own is difficult. It can lead to some stressful and exhausting nights spend at the computer which takes away from your real goal, your company. Our customized solutions can save your time so your business can grow. Put your effort where your passion lies!
Do you know where your business is heading? To learn more about how we can simplify your accounting process, call us at 727.828.9945 to schedule your free consultation.
About Accounting & Business Partners
Accounting & Business Partners is a CPA firm with an accurate, consistent and timely bookkeeping, payroll and tax departments. We believe that success lies in numbers. However, the drive behind the numbers is what truly matters. That’s why we look beyond the financial statements.