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As a self-employed person, you function as a business. You have an income from the manufacture and sale of goods or provision of services. You may work alone or with other self-employed partners, or you may hire employees or independent contractors. You have fixed, variable and perhaps discretionary expenses you incur in conducting your business. Simply put: If you take in more money during a specific period than you spend, you make a profit. If your expenses exceed your income, you lose money.
Most of the information for this statement comes from your first-year monthly budget (cash flow statement), and from estimated calculations on depreciation from your tax advisor. Specifically, you will need:
If you are using business accounting software, the profit and loss statement should be included with the standard reports. Even if you have this report in your system, you should still know what information is required to prepare the report.
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