Question: Why is my profit number different than what shows in my bank account?
Answer: On your profit and loss statement (income statement), the payments that you make to yourself are not expenses. When you pay yourself, these transactions are called owners draws, and they will show up on your balance sheet. These transactions will not impact your bottom line profit, which is why the profit/loss on your income statement is different than the amount in your bank account.
*This applies if you’re a single member LLC or a sole proprietor
Know Your Worth® – The small business owners’ simple guide to bookkeeping and taxes.
If you’re looking for a little kickstart to get your finances in order, I’d love for you to join me and my small business friends over at Know Your Worth®.
The Know Your Worth® program includes access to a Certified Public Accountant and a membership site which includes short videos and beautiful, downloadable guides that will walk you through the main topics in each lesson. Each lesson will be released on a weekly basis to ensure that you don’t get overloaded with information, and you have time to review and ask questions before proceeding. We have a private Facebook group for check-ins, questions, and accountability!