How to Fill out a Corporate Profit and Loss Statement

by Kevin Johnston, Demand Media Google
Learn the ins and outs of profit and loss statements.

Learn the ins and outs of profit and loss statements.

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A corporation that is a small business must prepare a profit and loss statement each year. The IRS requires this statement to assess taxes, and the owners need it to determine whether the company is making or losing money. As a small business owner, you need to know how to complete a profit and loss statement for your company. You can fill out a profit and loss statement by following some simple steps.

Step 1

Write down your net sales. Net sales is all money received from sold products, minus returns and discounts. This figure goes at the top of your profit and loss statement. Your further calculations depend on the accuracy of this figure, so check to ensure you have counted all sales prices and accounted for all returns.

Step 2

Enter the cost of goods sold. This figure includes what you paid for goods you sold, and does not include administrative and overhead costs. Use your inventory counts at the beginning and end of the year along with vendor prices to determine the actual cost of goods sold. If you are a service company, you do not have a cost of goods figure because you do not sell inventory.

Step 3

Write down your selling expenses. These include wages and commissions for salespeople, sales office costs, shipping, warehousing and advertising. Place this figure underneath your cost of goods sold figure.

Step 4

Calculate and enter your administrative costs. Your nonsales personnel wages go here, as well as supplies, rent, telephone and travel. Do not include equipment purchases and repairs that extend the life of an asset, because these must be depreciated over the life of the asset.

Step 5

Calculate other income. This includes dividends, interest and payments from the sale of assets. You should also include rents and royalties paid to your company.

Step 6

Enter other expenses. These could be losses of any kind, including disposal of equipment or damaged products.

Step 7

Add up all your income and deduct all of your expenses, and you have your net income before taxes. This completes your profit and loss statement.

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