Profit and Loss Statement for Contractors! Know Your Accounting for MAXIMUM Profit!

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If you're a Concrete Business Owner, it's important to KNOW your numbers. Profit and Loss statement explained. #concrete #concretebusiness #businessowner #businesstips #concretecoach

In today's video I talk about the most important report in your concrete business. The profit and loss statement, also called the income statement.

In a high level overview I go over the various aspects of a profit and loss statement and what should be included in each category:

✅Revenue, what it means and when you record it, money collected vs jobs sold
✅COGS = Cost of goods sold - variable expenses like materials, labor, permits, dump fees, and equipment rental
✅Gross Profit - Revenue minus COGS should be at 50% to account for you other costs in your business
✅Overhead - indirect payroll, marketing, trucks and equipment, rent, utilities, phone bills, taxes, depreciation, accounting, legal fees, software, insurance, and depreciation
✅Net Income - what you make as a business owner, the money you take home as a business owner. Shoot for 20% to get ahead and to scale your business.

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[MikeK-ci]

Thank you, great presentation. You've given me a starting point thank you.

[FabriceArbaudie]

you may check with an accountant but in P&L, revenue is sales not cash collected.

[Yogahope]

we run a tile business and this was very helpful! Was confused how to claim material costs on tile laying material we buy on behalf of clients and learned through your video it's COGS! Thank you!

[davidlevin_]

Question: In your overhead category you include taxes. Do you include all taxes paid in that particular calendar year? Or do you include taxes paid (or not yet paid) for that tax year? For example, sometimes you pay estimated taxes in a different calendar year, or you might receive a refund for 2023 in 2024. How do you handle that in a profit and loss statement?

[nataliavega]

Thank you so much ! It help me a lot for our remodeling company

[AceCPAsBookkeeping]

TLDR: Understanding and accurately accounting for revenue, cost of goods sold, and overhead expenses is crucial for contractors to maximize profitability and achieve a target net income.

00:00 📊 Understanding the profit and loss statement is crucial for increasing efficiency and profitability, with revenue being the top number and important to distinguish from sales.
02:06 📊 Understand income statement and cost of goods sold to maximize profit as a contractor, ensuring labor costs in the profit and loss statement only include job-related payroll.
04:09 💰 Your cost of goods sold should be around 50% of your revenue to achieve a gross profit of 50%.
05:17 💰 Understanding and accurately accounting for overhead expenses is crucial for maximizing business profit and avoiding misunderstanding of gross profit.
07:21 💼 Contractors need to generate enough gross profit to cover overhead expenses, including payroll, marketing, and equipment costs, while also accounting for other expenses to ensure budgeting and profitability.
08:43 💼 Know your overhead costs and target a 20% net income to maximize profitability in your contracting business.
11:18 💼 Contractors should focus on maximizing net income rather than just increasing revenue, as competing on price can lead to lower profit margins and the need for higher volume to make up for it, and it's important to charge enough for services to afford additional staff.
13:23 📈 Detailing profit and loss statement for contractors, with a focus on concrete and landscaping, and encouraging viewers to like and subscribe for more related content.

[amilkardicostanzo]

Could this system be used if you want to see your profits per month?

[ICanFixYourHouse]

Never heard revenue and sales explained like that.. revenue is cash collected so you did 10k in sales but 9k was material 1k was profit so your sales is 10k and your revenue is 1k ⁉️