Are You Doing Monthly P&L and Balance Sheets?

The Two Core Financial Documents

Every founder needs to understand two fundamental financial statements and the difference between them.

Balance Sheet

Reports your company's assets, liabilities, and shareholder equity at a specific point in time. Think of it as a snapshot of what you own, what you owe, and what's left over.

P&L (Profit & Loss Statement)

Summarises your company's revenues, costs, and expenses over a specific period of time. It shows whether the business is making or losing money.

Together, the P&L and balance sheet give you an instant snapshot of your business.

How Often to Review

• Minimum: quarterly
• Recommended: monthly — especially at the early stage when things move fast and surprises can be fatal

Always have both documents to hand when speaking with investors.

Practical Tips

• Search for "P&L template" or "balance sheet template" online — there are many good free options
• It is fine to outsource this work to an accountant or bookkeeper, but you must review it yourself at least monthly
• Check their work diligently — do not assume it is correct because someone else produced it

Why This Matters for Founders

As a founder, understanding your P&L and balance sheet allows you to:

• Spot problems early — a bad month is manageable; a bad quarter you didn't see coming is dangerous
• Model future scenarios — whether the business is growing or contracting, you need to be able to forecast what happens next
• Have confident investor conversations — investors will ask; founders who can't answer lose credibility fast