Income statement and balance sheet

In order for you to follow the financial affairs of your company, you must be able to interpret at least the most important financial reports. This section explores the income statement and balance sheet.

Financial administration 1/2

  • INCOME STATEMENT

    From the income statement, you can see the instalments the result and costs of your company consist of. The information is presented without value added tax.

    the income statement consists of the following issues: Turnover (sales of the company) and other earnings.

    • Turnover (sales of the company) and other earnings.
    • Purchases and material costs (e.g. ingredients, beverages, etc.).
    • Salary costs, indirect salary costs and other personnel costs.
    • Depreciations and debt losses.
    • Other costs (e.g. rents, marketing expenses, etc.).
    • Profit.
    • Financial revenues and costs (e.g. interest on debts).
    • Appropriations.
    • Income taxes.
    • Net profit or loss for the period.

    Does your restaurant have an up-to-date budget? You can prepare the budget in the How do I start section.

  • BALANCE SHEET

    the balance sheet is a document that typically receives less attention from new entrepreneurs, but it can be said to be at least as important as the income statement. The income statement may show that the company is profitable, but the balance sheet may reveal that the company is actually highly indebted.

    The balance sheet specifies the assets and liabilities of the company. Assets are, for example, money in a bank account, trade receivables (i.e. sent invoices against which the other parties owe money to the company), money, goods and equipment in the storage. Debts consist of assets invested in the company, accounts payable, bank debts, tax debt, etc.

    Taxation is based on the financial statements. Annual tax calculation is prepared on the basis of the financial statements. Not all the expenses are tax-deductible, and you should know which expenses are non-deductible or partly deductible and identify them already during the financial year in order to avoid unpleasant tax surprises. But, you do not need to do this by yourself – your financial administration partner advises and guides you through this issue as well.