How is the profit calculated in the annual financial statement?
September 30, 2022 | 40,00 EUR | answered by Louis König
Dear tax advisor,
My name is Ben Koch and I run a small business in the catering industry. I have never created a financial statement before and now I am faced with the challenge of accurately calculating my company's profit. While I have some understanding of the basics of accounting, I lack the expertise to create the financial statement on my own.
In the past fiscal year, my business generated revenue from sales of food and drinks, but also incurred various expenses for personnel, rent, purchase of food, etc. I am unsure of which costs should be included in the profit calculation and how to accurately record them in order to obtain a realistic picture of the company's profit.
Since the financial statement forms the basis for the tax return and is also important for external stakeholders such as banks or investors, it is crucial to me that the profit calculation is done correctly and transparently. I want to avoid any errors or discrepancies that could lead to problems with the tax office or other parties.
Therefore, my question to you is: How is profit calculated in the financial statement and what steps are necessary to carry out a correct profit calculation? Are there specific guidelines or regulations that I need to follow? I would greatly appreciate a detailed explanation so that I can successfully create the financial statement for my business.
Thank you in advance for your help.
Sincerely,
Ben Koch
Dear Mr. Koch,
Thank you for your inquiry regarding the determination of profits in the annual financial statements of your company in the gastronomy industry. It is understandable that you may feel uncertain when it comes to correctly calculating profit and preparing the annual financial statements. I would like to assist you and explain the necessary steps for the correct determination of profits.
First and foremost, it is important to know that profit in the annual financial statements is determined by comparing revenues and expenses. Revenues are your income from the sale of food and beverages, while expenses represent the costs incurred for the operation of your business. Expenses include personnel, rent, and food costs, as well as depreciation, interest, and taxes.
To carry out a correct determination of profits, you must first record all revenues and expenses of the fiscal year. This is done in accounting, where all business transactions are documented and posted. It is important to carefully keep all receipts and accurately record all business transactions to ensure a clean accounting.
After all revenues and expenses have been recorded, the operating result, i.e. the profit or loss of the company, is determined. For this purpose, revenues are compared to expenses and the result is calculated. This result forms the basis for the tax return and the annual financial statements.
There are certain guidelines and regulations that you must adhere to when determining profits. These include, for example, the principles of proper accounting (GoB), which ensure that accounting is done properly, completely, and accurately. Tax regulations must also be followed to avoid errors or inconsistencies.
I recommend seeking professional support from a tax advisor or accountant to ensure that the annual financial statements are prepared correctly and transparently. An expert can help you capture all relevant costs and conduct profit determination professionally.
I hope this information is helpful to you and supports you in preparing your annual financial statements. If you have any further questions or need assistance, I am at your disposal. Thank you for your trust and I wish you success in determining the profits of your company.
Best regards,
Louis König
Tax Advisor
