For Business startups
Every set of business accounts must contain a profit and loss account. This account is important for calculating your personal tax liability if you are trading as sole trader or partnership whereas for incorporated company it will be for corporation tax computation.
A profit and loss account is a summary of all the sales and expenses incurred during your business accounting year. An example of a straightforward profit and loss accounts is tabulated below.
Michelle Cruz
Profit and loss account for the year ended 31 March 2009
|
£
|
£ |
| Sales |
|
35,720
|
| Less Expenses: |
|
|
| Bad debts written off |
300
|
|
| Office expenses |
225
|
|
| Depreciation |
1,000
|
|
| Travel expenses |
475
|
|
| Hotel expenses |
550
|
|
| Electricity |
3545
|
|
| Charitable donations |
150
|
|
| Entertaining |
235
|
|
| Postage |
102
|
|
| Telephone |
175
|
|
| Insurance |
480
|
|
| Rent |
12,000
|
|
|
|
|
|
|
19,237
|
|
|
|
| Net profit |
|
16,483
|
|
|
|
Remember that entertaining expenses are not tax deductible business expenses and therefore must be added back to your accounting profit when calculating your tax liability.
If you require assistance in calculating your tax liability and completing your tax return, our accountants at Concise will be more than happy to assist you for a fee.
Concise Accountancy – Complete accounting solutions for business
