Set up a simple profit and loss account for yo..DOCVIP

Profit and loss account – the basics What is a profit and loss account? - a summary of business transactions for a given period?- normally 12 months. By deducting total expenditure from total income, it shows?the break even point whether your business made a profit or loss at the end of that period. Who should see it: Owners Shareholders Potential HM Revenue Customs - work out your tax bill. Do you need a profit and loss account? By law, if your business is a limited company or a?partnership whose members are limited companies – yes you must produce a profit and loss account for each financial year. Self-employed sole traders and most partnerships dont need to create a formal profit and loss account Profit and loss accounts are handy if you are looking to grow your business, or need a loan or mortgage. Keeping accurate records You?need to keep self-employment records for five years and limited company or partnership records for six years after the latest date your tax return is due. Accurate record keeping has important benefits. It: helps you or your company avoid paying too much tax provides back-up for claims for certain allowances reduces the risk of?interest or penalties for late tax payments helps you plan and budget for tax payments gives you the information you need to manage your business and make it grow enables you to report on your profit or loss easily and quickly when required will improve your chances of getting a loan or mortgage makes filling in your tax return easier and quicker helps reduce fees if you use an accountant - your annual accounts will be far easier to produce The basic records you will need to keep are: a separate list for petty cash expenditure if relevant a list of all your sales and other income? ?? ?? a record of goods taken for personal use and payments to the business for these a list of all your expenditure, including day-to-day expenses and equipment? a record of money taken out for personal use or paid in from pers