Income Statement Template

There is no debating the fact that an income statement is a very important document whether you are a salaried individual or a businessman. And there's always a fixed format to do things like these, as it helps other people understand the report better.

Streamlining Income Statements

It is supposed to be a detailed statement about the various incomes and expenses of the business. The statement, apart from being mandatory for businesses, helps a business, as well as an individual, to understand the cash flow or where exactly the money is being spent. Having known this, the businessman can go ahead and try to reduce costs, if he feels, are unusually high. It can also help you analyze the incomes and expenses of the business as compared to those of the previous financial year, monitor the progress and correct the decline, if any.

An income statement is also an important document for taxation purposes as per the rules of the IRS. After all, your final income/profit is taxed. Hence, it helps you calculate your income at the end of the month/year. So for the purpose of calculating the income tax, the income statement needs to be prepared. The statement has to be easy to understand and use, at the same time, should be easy to update, in case there are any changes to be made to it.

Sample Template

The statement consists of two parts: the sources of income and the expense-heads. So the first thing you need to do is to divide it into two parts.

The second part is to arrange the columns. The first column will be for the particulars of the incomes and expenses. The various accounts are created under each head so that the names of these accounts will be written here.

I usually like two columns for amounts, as often there are some sub-amounts that are added or deducted before arriving at the final amount. So my suggestion is that you should create two columns for amounts, the inside column for any additions or deductions and the outside column for the final amount.

Income Statement
Revenue
Income from Sales	$ 5000
Less: Sales Returns	- $ 200
Net Sales		$ 4800
Commission Received		$ 900
Total Income		$ 5700
Expenses
Purchases	$ 4000
Less: Purchases Returned	- $ 350
Net Purchases		$ 3650
Other Expenses		$ 500
Total Expenses		$ 4150

As you can see, the income statement isn't too difficult to prepare. All you have to do is add all the particulars of different accounts under each head and then enter the amounts pertaining to each account. Like I said before, preparing an income statement is very important so that you too understand where you are spending your money and how you can best reduce your expenses and increase your savings as a result.