n Shipping charges
Once again, this short, partial list gives you an idea and will get you started on the right
foot. Once your operating expense list is accurate, you can add up the monthly running
totals and see what it will cost you to operate your business each month.
Normally, established and operating businesses create an income statement once each
quarter or even once a year, but for your new business you're going to want to create one
each month for the first year.
A typical income statement will list the projected (or actual) sales, cost of goods sold, salar-
ies, and all other expenses, with a total as a positive or negative number at the bottom.
A financial statement measures your company's financial performance each month and will
tell you whether you're making or losing money—also known as the “bottom line.” The
financial performance is assessed by giving a summary of how much your business sells
each month while subtracting all of the bills (expenses), showing you the end result: the
net profit or loss. In my opinion, the income statement, otherwise known as the “profit-
and-loss” statement or the “P&L,” is an invaluable tool in determining the health of your
business at a glance. See “P&L Statements: Numbers to Live By” later in this chapter.
Sample Expense Worksheet
NeWCo, LLC STARTup expeNSeS WoRkSheeT
Expense Cash Budgeted Accounting services $100.00 Advertising $250.00 Cash $100.00
Equipment - Cpu $829.00 Equipment - Tools $190.00 Equipment - Bench $520.00 Insur-
ance $139.00 Internet service $62.00 Legal Costs $100.00 office supplies $300.00 Rent
$1,215.00 software $500.00 starting Inventory $1,830.00 Telephone service $88.00 Web-
site service $99.00
Total Startup Costs $6,322.00
The cash-flow projection shows you how your cash is expected to flow in and out of your
business; it does not measure how much you are making. Also, don't confuse a cash-flow
projection with a cash flow statement. The projection shows the anticipated usage of the
money in your account, while the statement shows the actual use of the money.