The Profit and Loss account is probably the financial statement that gets the most attention. At it’s simplest, it is merely a statement of income less expenditure – which hopefully still leaves a positive figure. If you are a plc (public limited company, who’s shares are traded on the stock exchange), the Companies Act lays down the exact format and rules that need to be followed.
Exemptions for Small and Medium sized limited companies
Small limited companies, as defined by Companies House, do not have to file a Profit and Loss Account at all. Medium sized companies may file an abbreviated Profit and Loss Account
There is no statutory requirement for sole traders to produce a profit and loss account, however, as previously blogged (18 May 07), a professionally prepared Profit and Loss Account helps to impress the bank manager and people you may need to persuade in the course of your business.