Free business plan pro forma income

But for our purposes, we will be using the first definition.

Free business plan pro forma income

As a reference from the initial income statement, some amounts are taken to predict the future outcome. For example, when an existing organization plans for a merger or acquisition it has to present it to the shareholders.

A pro-Forma income statement is just an income statement under certain assumptions with projections. It can be used as a basis for comparison and analysis under certain conditions. It plays a vital role in the planning process which can help to minimize the risk associated to undertaking a new project.

Pro Forma Income statement Basic Format There are various templates available on the internet, but some of the pro-Forma income free business plan pro forma income have some elements in common.

A pro-Forma income statement basically looks similar to the conventional income statement. The only difference between pro forma income statement and income statement is, the income statement is about past results, whereas the pro forma income statement is a projection of the existing income statement.

It shows the possible income in the next few years considering the situation. There is no visible difference in the format except for the time and value of the inputs. The pro-Forma statement you create will be tailored to your regular accounting needs.

It is considered that only a professional can make a pro-Forma income statement, but by following the steps below you can also create it. Step 1 The basic program usually used to create a pro-Forma income statement is Microsoft Excel. Under it, list the name of the organization.

Add the effective date of the statement under the title. Step 2 Similar to an income statement, name the first two entries of the column as sales and cost of sales. Set formulas on the right column beside it to deduct sales from cost of sales to get gross margin.

Remember, there can also be other items that may be included under cost sales, since it is a forecast of the income statement.

free business plan pro forma income

Step 3 Below gross margin, add the next element as expenses. Under expenses, list all the potential expenditures to be incurred by the organization for operating under certain conditions.

The list can include items like salary, utilities, depreciation, etc. Step 4 Now below total expenses add the field to enter the taxes to be incurred during the period.

free business plan pro forma income

Set the formula to deduct the possible taxes with total expenses to get the projected net income. Step 5 On the second column add all the actual values from the last calculated income statement to provide a reference in the pro-Forma income statement.

Here you can enter your projected values for each and every element, like sales, cost of sales, etc. Since you have set up the formulas you can see the real time changes in the net income.

You can create projections of many years using it. More tips about Pro Forma Income statement 1 You need to plan ahead from where you revenue is coming and you will be spending money. With a pro-Forma projection you will have no idea whether your business will be making or losing money.

They are just the best guess on what will happen to your company. Many first time entrepreneurs simply forget the expenses and project an incorrect pro-forma income Statement. Back all your information with strong reasons to avoid any confusion with the investors. Create a best, likely and worst case scenario separately in the statement.

This will indicate the investors on how fragile your company is.Pro forma projections is a fancy way of saying present your data in a standardized acceptable format and include all information required by proper accounting procedures.

Continuing with my series here on standard business plan financials, all taken from my Lean Business Planning site, the Profit and Loss, also called Income Statement, is probably the most standard of all financial statements. And the projected profit and loss, or projected income (or pro-forma.

A pro-Forma income statement basically looks similar to the conventional income statement. The only difference between pro forma income statement and income statement is, the income statement is about past results, whereas the pro forma income statement is a projection of the existing income statement.

Jun 29,  · The term “pro forma” in front of any financial statement primarily serves to label that version of the statement as not adhering to the strict “generally accepted accounting principles” (GAAP) standards that all publicly-traded companies must use to produce their financial statements.5/5(1).

A pro-Forma income statement basically looks similar to the conventional income statement. The only difference between pro forma income statement and income statement is, the income statement is about past results, whereas the pro forma income statement is a projection of the existing income statement.

A pro forma is any kind of document which is given as a formality or courtesy and contains information about a particular event. Pro forma are usually made for accounting purposes, as a record of a company’s various financial transactions.

Sample business plan financial projections and pro forma