Profit and loss statements are one of the most important documents you can make for a scaling company. They allow you to make the right strategic decisions when moving forward and keep track of your expenses and profit for when tax time comes around.
Unfortunately, building a free one from scratch on a spreadsheet program can be a little intimidating for some business owners.
Don’t worry, we’ll show you how to build one. If you’d rather just use our template, you can download one that’s ready to go.
Read on to learn how to use our template or build your own customized Google Sheets profit and loss template.
What Is a Profit and Loss Statement?
P&L or Profit and Loss statements are also known as income statements or statements of operations. These financial reports summarize a company’s revenue, profits, losses, and expenses over a specific period, usually a tax year.
These statements show the company’s ability to manage costs, create profits, and make sales. It uses accounting principles like matching, accruals, and revenue recognition. This makes it different from cash flow statements which only account for the ins and out of revenue through the business.
Why Are Profit and Loss Statements Important?
Creating profit and loss statements over a time period and then comparing them have a lot of advantages. They allow you to:
- Plan Ahead: Fresh businesses often create an estimated loss and profit spreadsheet as a part of their business plan. Although they don’t have any real business profits and losses to report, the P&L can be used to show loan agents or potential investors how they can expect to make profits over a time period.
- Complete Taxes: Businesses that are already established can generate P&L statements and use the information in those reports to fill out the tax reports. This also applies to small companies that must fill out the Schedule C Form.
- Understand Revenue and Expenses: P&L statements allow you to understand the origin of the costs of your business. This will enable you to make decisions on how you can cut them and how you can maximize your total income.
For example, maybe you’re seeing a steady rise in sales, but your total profit is barely increasing. Perhaps the culprit is the rising costs of transportation. These can be easily seen in your P&L statement.
Elements of a Profit and Loss Statement
A profit and loss statement tracks the expenses and revenue of a business over time. An organization needs to record different expenses and revenue in the P&L statement. A few of the categories are:
- Revenue: This category includes the sales of your company’s products and services. This will also include the recurring revenue not tied directly to the business’s main operations, including interest from banks and rental income.
- Gains: This category includes the single events that bring revenue to your business. These can include selling property and equipment, these need to be entered as part of the profits for your organization.
- Losses: These are essentially one-time costs that can present a loss for your business. These can be accidents that incur extra costs or a lawsuit.
- Expenses: This includes the operating costs of the business. This can include the cost of sold goods, commissions, and wages.
- Net Income: This is the total calculated at the end of the P&L statement. To find the net income, you must add all the revenue and the gains and subtract the losses and expenses.
How to Create a Google Sheets Profit and Loss Template
Now that we know the elements of a P&L statement, let’s look at how you can create one in Google Sheets. Here are the steps you need to follow to create a Google Sheet profit and loss template:
Remember, if you don’t want to build your own profit and loss spreadsheet, you can always just download our profit and loss statement template for Google Sheets instead.
If you need a more complex sheet, we recommend checking out this Business Financial Management Sheet.
- For this profit loss statement template, we will need 14 columns. Before we start adding the categories and dates, we first need to add a label. To do this, select the first 14 cells from A1:N1. Click on Format and then on Merge cells. Then click on Merge all.
- Now we are going to start adding the 5 elements we discussed before. Let’s start by adding the Income category first. To do this, we will add an Income/Sales label which will tell us the names of the income streams. Then we will add the 12 months of a year. Finally, we will add a Total column that will add up the data. Feel free to add columns depending on your requirements.
- Under the Income/Sales heading, add the revenue streams. For our template, we added Product Sales, Service Sales, Direct Phone Sales, and Website Income.
- When you’ve added all the subheadings, type Gross Revenue or Total in the cell below.
- Next to that cell (In column B), use the SUM function to get the subtotals for that month by typing =SUM( then highlighting the cells with the data to sum the column. In our template example, that’s cells B4:B7.
- Press Enter
- Click and drag the small blue box over the rest of the cells in the Gross Revenue column to apply the running total formula to the rest of the cells.
- In the Total column (column N in the example template), use the SUM function to get the total for the row. Ie, cell N4 should have the following formula:
- Click and drag the small blue box over the rest of the totals for each row.
- In the cell that lines up with the Total columns and Gross revenue row, (N8 in the example), use the SUM function again to find the grand total for this section by summing all the other figures in the Total column. In our template, the formula is:
- Optional: add color to each row by highlighting them and clicking the fill shortcut in the toolbar.
- Repeat steps 2-11 but with different headings for the costs.
- Add a Gross Profit row. You’ll notice that the above example has a Gross Profit row. The formula we added to cell B17 to click and drag across the rest of the row is =B8-B15, which is the gross revenue for January minus the Cost of Goods.
- Add a Net Proft row. We used the formula =B17-(B27+B34), which is the profit subtracted from the totals of the other expenses.
Note: If you’ve added extra rows and columns to your template, you will have to change the cell references to match where the totals for each column lie.
Frequently Asked Questions
Does Google Sheets Have a Profit and Loss Template?
As of now, there isn’t a Google Sheets P&L template in the template library for you to use. However, it is extremely easy to create on sheets. Add the revenue, gains, losses, expenses, and net income into the monthly profit and loss template. Make sure to use the SUM formula to add the values to find the total profit. Or, you could download our profit and loss statement template.
How Do You Do Profit and Loss in Google Sheets?
Creating a P&L template in Google Sheets takes only a few steps. First, you must add columns for the names, months, and total. Once done, leave out the space for the data and use the SUM formula to add the values for the cells.
How Do You Calculate Profit and Loss?
Just like the name implies, you must subtract any losses your business has incurred from the gross profits. The gross income may be actual sales or sales minus product costs. Then you must also subtract any other losses your company has incurred, like operating expenses.
Wrapping up the Profit and Loss Template Guide
This guide should have helped you understand how to make your own Google Sheets profit and loss template.
If you don’t want to build one from scratch, you could download ours and make customizations from there.
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