You should perform an annual review of your business’s profit and loss statement, also known as the income statement. Your P&L statement will show your revenue and expenses, with the difference being net income or loss.
As a small business owner, you may be tempted to skip this step or delegate the task to someone else. However, examining your P&L at the end of the year is useful to check your progress against previously budgeted figures and compare to year-ago numbers.
Use the P&L review process to create a more accurate budget for the next year. For instance, if expenses are running higher than planned, you can make adjustments.