The income statement is an important financial table in your business plan . It allows you to measure the profitability of your project. This profitability is measured with the result for the financial year, which is calculated by subtracting the forecast income from the forecast costs.
In this file, Le Coin des Entrepreneurs explains how to build an income statement in a business plan .
Determine your forecast turnover
To prepare your income statement, you first need to work on your forecast turnover assumptions . This is, without a doubt, the most complicated part to assess. The numbers you are actually going to achieve will be different from what you are going to predict because it is impossible to predict the future of your business.
In order to obtain a coherent business plan, however, you must base yourself on solid assumptions, which will emerge from your work in your market research and your field tests. We have already discussed this subject in more detail on Le Coin des Entrepreneurs:
List your expenses and investments
To carry out your activity, you are going to have a certain number of expenses . Expenses correspond to the second element found in the income statement.
List and assess your forecast costs
The income statement then contains all of your forecast expenses , that is to say all the expenses that you plan to make: your purchases of goods, products or raw materials, your overheads: rent, small equipment, management costs (accounting, banking, insurance), travel costs, telephone and internet, etc.
The investments are capitalized expenditure (above 500 euros excluding items related taxes used over several years). This means that in accounting, you are not going to deduct them immediately at the level of your income statement. Investments appear on the assets side of your balance sheet and are depreciated in the income statement. A calculation must be carried out at this level.
Expenses are presented by category in your income statement. To have a good reading of this financial table, you must group your expenses by type, as we explained previously:
Purchases directly linked to your activity,
Overhead costs,
Taxes and fees,
Salaries and social contributions,
Depreciation charges,
Financial charges.
Calculate the sub-results of the profit and loss account of your business plan
When the income and expenses have been listed and valued, you can then proceed with the calculations to build your income statement.
For example : you buy a vehicle for 10,000 euros and you plan to use it for 5 years. In your income statement, you must find in your expenses a depreciation allowance for an amount of 2,000 euros, for 5 years.
Profit after tax
Profit after tax is obtained by subtracting income tax from current profit before tax. In the income statement, income tax is only present when the tax regime is corporation tax.
For micro-enterprises or companies with IR, the profit tax is calculated and paid directly by the entrepreneur (or by the partners in the companies).
Present your income statement correctly in your business plan
In your business plan, your income statement will be in the form of a table which will group together the products and expenses by mass: turnover, purchases, overheads, personnel costs, etc. The last line of the table corresponds to the result after tax. In general, the income statement of the business plan is calculated over a period of 3 years (broken down into 3 periods of 1 year).
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