Income statement template

Do small businesses need to use an income statement template?

Yes, an income statement, otherwise known as a profit and loss (P&L), is a record that measures and shows all the revenues and expenses a company incurred during a specific period of time. The income statement helps determine a company’s financial health and the financial progress it made during a particular period. The income statement contains sections for revenue and expenses, which include net sales, gross profit, cost of goods sold, selling expenses, general and administrative expenses, and net profit.

A simple income statement template can help you create this financial document with information from your own company’s finances.

What is the income statement used for?

The income statement is used both internally and externally for different purposes. Internally, the income statement can be viewed at the corporate level, department level, product level or even customer level.

By evaluating the income statement at each level, the company can gain insightful understanding of how profitable a product, customer relationship or department is and adjust as needed.

The income statement is considered one of the most important financial statements due to the amount of information that can be pulled out of it. Externally, the income statement is used by investors, creditors, and stakeholders to understand how the company is making money and how they are allocating the revenue.

The income statement acts as the first impression to investors and creditors as a proof of business success or failure.

Why use an income statement template?

Using an income statement template offers several advantages for small businesses:

1. Efficiency: You can simply enter your financial data into the income statement template, which automatically calculates subtotals and totals.
2. Accuracy: Income statement templates ensure that you include the necessary financial information and calculations, reducing the risk of errors and ensuring accurate reporting.
3. Consistency: Templates provide a standardized format for presenting financial information, which is beneficial when comparing income statements across different periods, tracking performance, or communicating financial data to stakeholders.
4. Compliance: Some industries have specific financial reporting requirements. Using an income statement template helps ensure that you adhere to those standards and regulations.
5. Customizability: While templates provide a starting point, you can modify the categories, add or remove sections, or adjust the layout to align with your industry or reporting preferences.

If you’re uncertain about financial reporting or have complex accounting needs, consulting with a qualified accountant or financial professional is recommended.

How to prepare an income statement template

Here’s how to do an income statement in Excel:

Step 1: Download income statement Excel template.
Step 2: Determine the period of time for the income statement (monthly, quarterly, yearly).
Step 3: Export trial balance from accounting system for the specified period.
Step 4: Enter data into the income statement template.
Step 5: Calculate net income.

You can find more detailed instructions on how to use our income statement template when you download the template.

How often should an income statement template be prepared?

It’s recommended that businesses prepare and review monthly income statements to evaluate performance and make adjustments as needed to stay on track with financial budgets and goals.

FAQ:

What is the purpose of an income statement template?

The purpose of an income statement template is to provide a standardized format and structure for creating an income statement. It serves as a tool to organize and present the financial information related to a company’s revenues, expenses, and net income in a clear and consistent manner.

What information does an income statement include?

Here are the key components typically included in an income statement:

• Revenue
• Cost of goods sold (COGS)
• Gross profit
• Operating expenses
• Operating income
• Non-operating income
• Net income

Can this income statement template be used in Google Sheets?

Yes, download our income statement Excel template. Then in Google Sheets, follow these steps:

1. Create a new or open an existing spreadsheet.
2. Click File. Import.
3. Choose the Excel income statement template file and click Select.
4. Choose an import location option:
   Create new spreadsheet,
   Insert new sheet(s),
   or Replace spreadsheet.
5. Click Import data and you should have this income statement template in Google Sheets.