What is a Profit And Loss For Self Employed?

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.

What information do I need to prepare this statement?

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:

• A transaction listing, of all the transactions in your business checking account and all the purchases made with your business credit cards.
• Include any petty cash transactions or other cash transactions for which you have receipts.
• For income, you will need a listing of all sources of income - checks, credit card payments, etc. You should be able to find these on your bank statement.
• You will also need information on any reductions to sale, like discounts or returns.

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.

Sources: https://smallbusiness.chron.com/selfemployment-profits-losses-18109.html, https://www.thebalancesmb.com/how-do-i-prepare-a-startup-profit-and-loss-statement-397546