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A profit and loss account template is important whether you are running a business or in the process of setting one up. If the latter, as a part of P&L forecasting, it forms a required part of a business plan (see our article What should be in your business plan here). 

A profit and loss sheet shows business performance over a specific period of time, recording incomings and outgoings and sales income generated, including estimates of work in progress but not yet invoiced.

As part of your Annual Accounting

A P&L statement is usually prepared annually and shows revenues and costs and how much profit has been made over the period. It should form part of your overall bookkeeping set of documents - along with a Balance Sheet and Cash Flow Forecast.

For limited companies, and sole traders earning over £50,000 a year, a Profit and Loss Statement is required for HMRC.

As part of a Business Plan

The financial analysis section within a business plan should be about three pages - with data in an optional appendix. The first parts should consist of: i   - Summary of forecasts.
ii  - Monthly profit and loss forecast for two years.
iii - Profit forecast for further three years.
iv - Monthly cash flow forecast for two years.
v  - Cash flow forecast for further three years (optional).

Use this blank template to build your own profit and loss account.

Click here to download the profit and loss pdf.

Notes for the pdf

• Sales: All income from sales should be added for the period the P&L is being prepared for whether or not your have received payment. Sales with no received payment should be added to the debtors account in your balance sheet.
• Cost of sales: Includes any direct costs involved in making and selling the product purchased, including the wages of  those involved in making the product and purchases made from suppliers for goods or raw materials used in the accounting period.
• Overheads: Includes general expenses and all other costs you have been invoiced for during the period, such as: rent, rates, professional fees, te vehicle costs, national insurance and pensions, utlilities etc. Items invoiced for but not yet paid are added to your creditors account on your balance sheet.
• Depreciation: It is a judgement call on how long a period fixed assets should be depreciated over but be consistent in your application of it.