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.
- 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.