For every store owner, keeping up with store profitability and margins is essential to run their store successfully.
To calculate profit loss, 2 elements need to be known. Total revenue and total spendings.
At this point, WooCommerce provides total revenue by the orders received. However, spendings made are not recorded thus provided by WooCommerce.
This need should be satisfied with a complimentary plugin and Finpose is the accounting plugin where you can save your spendings. It also uses spendings data while automatically creating your profit-loss reports.
Spendings in Profit-Loss Report
Spendings can be added in different categories, such as Inventory, Storage, Office spendings. You can also add your custom spending categories.
Having all spendings recorded in your accounting is the key to an accurate profit loss report. Therefore it needs the best attention to not miss any spendings you made for the month.
For each spending you can also specify tax receivable for that spending, so it would be taken into account during automatic tax calculation.
As soon as spendings and tax receivables entered correctly, WooCommerce profit-loss report is generated in seconds, by visiting Finpose reports page.
Revenue in Profit-Loss Report
The profit-Loss report consists of entire year data for the selected year. You can also change year easily and compare profit-loss data with previous years.
In the top row, there are income lines which are revenue from your WooCommerce store sales. The shipping fee of orders and item Cost of Goods Sold (COGS) from the Finpose Inventory module is subtracted from your total sales. This calculation provides your store Gross Profit.
To reach Net Profit from Gross profit, spendings must be subtracted. In the 2nd section of the profit-loss report, you can spot each spending category and total spendings associated with them easily. At the end of the section total spendings is provided.
Taxes in Profit-Loss Report
The last step in the process of calculating profit loss for your WooCommerce store is to calculate the Net Profit of the store. However, before this step taxes must be reflected on to Gross Profit, provides Net Profit Before Taxes (a.k.a EBITDA)
For a specific month, your tax balance is;
Tax Balance = (Taxes Payable – Taxes Receivable) – Taxes Paid
Your tax balance for the specific month is subtracted from Net Profit Before Taxes which provides your Net Profit for the given month.