Whether you're building an empire or working from home you need to understand your financials. It will give you confidence and let you know if all your business efforts are paying off. But for some people, accountants are scary monsters that talk in a foreign language. Over the next few weeks, we’ll break down the basics so on your next visit to the accountant you don’t just hear Blah, Blah, Blah. Lesson 1: The Profit and Loss Statement. The easiest way of thinking of it is what you earn Vs what you burn with the difference being whether you made or lost money. These reports contain information over a period of time, for example, a month or a year and show the total of what you have sold to customers compared to what you have spent with suppliers and on your employees. This is not to be confused with the cash you have in your bank account. At the very bottom of the page, will be a number that represents how you did over the period, either a net profit or a net loss. It is quite literally, the bottom line. See, accounting terminology is very literal, not scary at all.
