Where Did My Profit Go?
I get a lot -- and I mean A LOT -- of small business owners wanting to know why their Profit and Loss report shows that they made money -- yet they don't actually have that money in the bank.
I would probably get this question more often, but I only get it from people who feel really comfortable with me as an advisor. Most small business owners either:
• Want to ask this question, but are afraid of appearing ignorant (they shouldn't!) or
• Ask this question of what seems like the right people, but aren't. They usually don't get an answer from their bookkeeper because he or she just doesn't know, and the CPA is just too busy with all the dang taxes to get into it with you.
Of course, I can't answer this question about your business specifically, but I can tell you how to find the answer in QuickBooks.
Before we do this -- I'm going to clue you in to something you may have noticed, but not fully realized the implications of -- The Profit and Loss report -- the only financial report many small business owners really look at and comprehend - only tells part of the story. The Profit and Loss report only tells you about Income and Expenses. It does not show activity related to the money you owe people, that people owe you, or that you personally put in or take out of the business. Sometimes this activity can be pretty significant -- and it is the key to understanding how your bottom line -- profit -- relates to your cash flow.