I think I created my first Profit & Loss Statement... I think
So, when going “legit” I am learning that there are many things you must do. To name a few: hold monthly board meetings, even if they are just with yourself (takes talking to yourself to a whole different level), create an operating agreement, choose if you want to be taxed as an LLC, S-Corp, C-Corp or Sole Proprietorship and lastly (not that this is it) take special care to document your financials. Enter, the Profit and Loss statement or the P&L.
I have a bit of knowledge of this document, not a lot but just enough to be dangerous, and know what to google. The categories are:
Sales
Operating Expenses
Cost of Goods Sold
Operating Expenses - Fixed
Business Depreciation (Assets)
Debt
The good thing is my business has zero debt, I am not sure how long this will last, but I will take the “W” at this point! Now, this may or may not be everything that you need to include on your P&L but for me, at this very moment, it does the job. It has really made me take a look at how much I have spent this year so far, as well as determine how much my assets (which are my two machines) have depreciated (apparently, this is important for tax breaks, WHO KNEW!). Baby steps and research, that is the name of the game, when you are doing things on your own. Paypal was a big help in the creation of this document. Since 95% of my payments are through PayPal, I was able to filter month by month for my sales. The other tool I used was my bank account. Here, I was able to track my operating expenses (these change monthly) and my operating expenses - fixed ( these are fixed, things like the software I use to create my custom labels, and the cost of my website).
If you would like to view the P&L I created, you can click HERE. Again, it might not be perfect, but it is perfect for what I need right now. As always, comments criticisms, and critiques are all welcome.
I think I will document my journey as a business owner for this blog. What do you think?