Financial Planning & Accounting: Key Financial Statements

There are three key financial statements you’ll need to work with in order to run your small business:

Profit & loss statement

  • Gross revenue: the total amount of money that your company brings in.
  • Cost of goods: the direct costs of the goods purchased by your company.
  • Gross profit: gross revenue minus cost of goods.
  • Operating expenses: salaries, rent, supplies, marketing, all other supporting costs.
  • Net income: a company’s total profit after operating expenses are subtracted.

Balance sheet: current snapshot of company’s financial health.

  • Assets
  • Liabilities
  • Shareholder’s equity

Financial projections: predicted income statements for the future of your company.

  • These usually don’t project any further than 2-3 years.
  • Investors will want to take a look at your financial projections before committing to any business.

For more info on starting a business, check out this free course on How to Start a Business: The Complete Guide.