Profit And Loss Statements Explained for Dental Practices

As a UK business, you must regularly record your profit and loss statements. By determining your business's profit status, you can better understand the costs of running your practice and your position regarding working capital. 

As a business owner, you may choose to make this process easier by hiring an accountant or at least installing cloud-based accounting software. Ready to learn more about P&L statements and how this information can help grow your dental business? Keep reading this guide.

Alternatively, if you need a funding boost to reset the balance, then speak to Rangewell's finance advisors today. 

What do you need for a profit and loss statement?

P&L statements provide you with an account of how well your business has performed during a specific time frame. This is achieved by incorporating your income, operating expenses, gains and losses.

As such, in order to generate a reliable Profit and Loss statement that clearly represents your business's profitability, you’ll need to gather and log details including:

• Income: sale of goods and/or services, subscriptions, customer fee payments, fully paid business-to-business (B2B) invoices and any other sources of income attributed to your primary operations.
• Operating Expenses: staff wages, cost of supplies, utility bills, equipment repairs, insurance, purchases and any other expenses relevant to running your day-to-day operations.
• Gains: Capital gifted to your business, received from lawsuits or from other sources that aren’t generated as a result of your primary operations.
• Losses: Money lost from your business which doesn’t arrive as a result of your day-to-day operations, such as environmental damage to your premises, interest incurred and the sale of assets for less than their original purchase price (depreciation).

What format do my income statements need to be in?

In accordance with Generally Accepted Accounting Principles (GAAP), when choosing a format for your business’ Profit and Loss accounts, you need to use a method that clearly displays aspects such as gains, losses and the cost of your goods and/or services in a suitable manner. As such, you have two options available:

Single-Step Income Statement

Single-step Income Statements are often considered the simpler of the two formats and is often adopted by SMEs which run small-scale operations. It’s also a method of handling your business’ profits and losses using the formula:

Net Profit = (Income + Gains) - (Operating Expenses + Losses)

However, as your operations grow in size and complexity, using this format may no longer be appropriate. This is because three parties (for example, lenders) may want to see more detailed information which is expanded and compartmentalised rather than compressed, making it easier to perform calculations for aspects such as your Gross Margin.

Nevertheless, here’s how to make profit and loss account in excel using this format.

• Revenues and Gains
• Total Income
• Expenses Losses
• Cost of supplies
• Marketing
• Asset depreciation
• Staff wages
• Premises rent
• Travel expenses
• Net Income

Multi-Step Income Statement

On the other hand, if your day-to-day operations have grown in complexity and/or you’re an established company, you may want to consider using the Multi-Step Income Statement format instead.

This method gives a more concise rundown of your business’s revenues, expenses, gains, and losses, as well as displays multiple subtotals. Plus, another reason why you may prefer using this format is that makes it easier for 3rd parties to ascertain details such as your Gross Margin. So if you’re to get on top of your business's finances, here’s how to make a profit and loss account in excel using this format instead.

Need help supporting your business’ finances?

Keeping a close watch on how well your business is performing is a vital responsibility that cannot be understated. Yet in spite of the necessity, managing your business' finances effectively can prove challenging, especially when you have other aspects to contend with as well.

However, that’s why it’s important for you and your accountant to regularly log and review your business’ P&L statements, giving you a clearer insight into whether you’re profitable or if changes to how you operate are required.

But if you need additional support in the form of capital for episodes such as seasonal trading periods, uneven cash flow or late customer payments, you could reinforce your financial position by applying for Working Capital Finance. All you need to do is source an agreement which is appropriate for your business's needs.

At Rangewell, we help businesses secure the funding they need to succeed. Our team of independent advisors will help you to assemble a strong application, giving you the best chance to land the finance you need to grow. From dental equipment finance to refinancing your entire dental practice, we're here to help.

As an independent broker, we have access to the whole of market, including traditional and specialist lenders.  It's our job to listen to your plans and help secure finance that can turn this into a reality. Get started with your loan application today; speak to Rangewell.