How to Calculate Profit & Loss

Tracking profit and loss is paramount to the success of any business. You must know the areas in which you are most and least effective. This article will show you how to determine those areas.

Things You'll Need

• Calculator
• Pencil
• Paper

Instructions

1. Decide what time frame you will be reviewing (month, quarter or full year).

2. Write down all of the sales areas your business encompasses.

3. Write down the budget you allot to each division within the specified time period. Record the sales figure you needed to reach in order to clear a profit.

4. Gather the sales reports for each division, and write down their respective totals of dollars brought in.

5. Take the dollar amount earned by each division and subtract it from the amount spent out.Example: The retail department spent $13,000 and took in $11,983.$13,000 -11,983= a loss of $1,017.Do this for each division.

6. Add the spending figure for each division, then add all the actual sales.Subtract the higher number from the lower to determine your overall profit or loss.

Tips & Warnings

• Purchasing the basic QuickBooks system will help you keep track of all of your business accounting. QuickBooks is very user-friendly.

• These figures will not necessarily reflect your utilities outlays or operating cost.