A profit and loss statement, also called a P&L or income statement, lists your revenue and all your costs for a period and ends with net income. It reads from top to bottom: revenue, cost of goods sold, gross profit, operating expenses, depreciation, interest, taxes, and finally profit or loss.
Every bank, investor and tax office expects the same order, which is what makes plans comparable. The period is usually a year, a quarter or a month.
Worked example for one year. Revenue 480,000 euros. Cost of goods sold 192,000 euros, so gross profit is 288,000 euros, a gross margin of 60 percent. Personnel 168,000 euros, rent 24,000 euros, marketing 36,000 euros and other operating costs 18,000 euros add up to 246,000 euros of operating expenses, which leaves 42,000 euros. Depreciation of 12,000 euros gives EBIT of 30,000 euros. Interest of 4,000 euros gives a pre-tax profit of 26,000 euros. Tax at 25 percent is 6,500 euros, so net income is 19,500 euros.
Three things founders get wrong. They mix the P&L with the cash flow plan. The P&L records revenue when you invoice and costs when they belong to the period, not when money moves. A loan repayment never appears in the P&L; only the interest does.
They also record VAT as revenue. If you charge 119 euros including 19 percent VAT, your revenue is 100 euros and 19 euros belongs to the tax office. Plans built on gross amounts overstate revenue by that share.
Finally, many plans show only annual totals. For the first two years, show months as well. An annual total hides the six months in which the account was empty.
A Foundor plan generates a P&L for every planned year with these lines already in place.
