Comparative Income Statement

A comparative income statement is used to summarize your business’s profitability over several periods. It may also be used to create financial projections for several periods into the future. Investors prefer seeing several periods for financial projections because it gives them a better evaluation of the company’s long-term prospects. I have included the general instructions for specific line items below, which can also be found on the template. Feel free to modify, delete, add, and reformat the income statement as you please.

General Instructions:

Revenue: if you have multiple streams of revenue, you may want to split this item up into several categories. For example, a lawncare company might have mowing services, fertilizer sales, and mulching services as its three main sources of income.

Cost of Goods Sold (COGS): for a manufacturing business, this includes the cost of raw materials, direct labor, and manufacturing overhead. For merchandising companies, it is calculated as:

   COGS= Beginning Inventory + Purchases – Ending Inventory

If you operate a service business that does not sell or manufacture tangible products, you could replace this with a “cost of services” line, which includes expenses directly related to service revenue (e.g. professional service staff wages in an accounting firm).

Salary: for a manufacturing business, this only includes wages which are not factory-related. This would include wages for any staff member NOT involved in directly producing products (direct labor) or supervising the production of products (manufacturing overhead).

Payroll: payroll taxes include federal, state, and local payroll taxes. You might also pay towards retirement or healthcare plans for employees, make withholdings in accordance with employee W-4s, pay for workers compensation insurance, or provide paid leave for employees. Check with your accountant or legal advisor to ensure you have paid every applicable tax, and to calculate this total.

Tax: this does NOT include income taxes, but does include other taxes which are necessary for continuing business operations.

Depreciation: depreciation is an allocation of the cost of using your fixed assets. It spreads the cost of an asset over its useful life to match the cost of the asset to the revenue it generates. Recall that fixed assets are anything from which your business expects to enjoy benefits from for more than one year. The exact amount of depreciation you record depends on the method you use to calculate depreciation.

Miscellaneous Expenses: this is a combination of small expenses that do not deserve their own line item. In total, this line should represent a very small portion of total expenses.

Other Expenses: if you have any additional expenses which are not listed here, please replace this item with that expense and detail the amount. Add as many additional expenses as you need.