Learn how Whittaker & Co makes profit and loss (P&L) accounts easy for self-employed professionals. Simply give us your income and expense data, and we’ll take care of the rest – delivering accurate, compliant financial statements.
Managing income and expenses is key for any self-employed person. At Whittaker & Co, we specialise in preparing clear, accurate P&L accounts. This guide explains what P&L statements are, why they matter, and how to provide the information we need to create them for you.
What is a Profit and Loss Statement?
A profit and loss statement is a financial document that your income and expenses over a set period. It helps self-employed individuals by:
- Determining Taxable Income.
- Applying to Various Business Types.
- Offering insights beyond tax.
Cash vs. Accrual Methods of Accounting
Before preparing your P&L account, it’s important to know which accounting method you use: cash or accrual.
Cash Accounting:
- Records transactions when money changes hands.
- Example: If you run a catering business and get paid after hosting an event, you record the income, and expenses (e.g. food supplies) once the transaction is complete.
Accrual Accounting:
- Transactions are recorded when they occur, even if payment hasn’t been made.
- Example: You own a software company and send an invoice for completed work, the income is recorded immediately. Similarly, expenses, like buying equipment, are also logged when made, not when paid.
How We Create Your Profit and Loss Statement
We handle your P&L accounts using the income and expense data you give us. Here’s how we do it:
- Income: We total your income from all sources, including sales and services, based on the information you supply.
- Expenses: We account for your business expenses, such as rent, utilities, and materials.
- Tax Deductions: Our team identifies applicable small business tax deductions to ensure you minimise your tax burden.
- Net Income: We calculate your total income minus expenses to find your net profit for the given period.
It is important to provide accurate income and expense data, as this impacts your tax and financial reports.
Benefits of Having a Profit and Loss Statement
A profit and loss statement offers several key benefits:
- Financial Insights: A clear view of your business’s financial health.
- Trend Identification: Spot trends in your income and expenses, such as seasonal fluctuations.
- Informed Decisions: Use this information to make smarter decisions about managing your business finances.
Get Help from Whittaker & Co
At Whittaker & Co., we take the stress out of managing your profit and loss accounts. Just provide us with your income and expenditure details, and we’ll handle the rest. If you have any questions or want to discuss how best to keep accurate records, get in contact. We will ensure your financial records are well-organised and compliant, allowing you to focus on your business.
How to calculate your taxable profits (Self Assessment helpsheet HS222) – GOV.UK (www.gov.uk)
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