As a small business owner, understanding your business finances is one of the most valuable skills you can develop. At Bidwell Accountancy Ltd, we work with many small businesses in Milton Keynes and beyond, helping them make sense of their income and expenditure — two key concepts that underpin every financial decision.
Grasping the difference between what comes into your business (income) and what goes out (expenditure) is essential for maintaining healthy cash flow, making informed decisions, and ensuring the long-term success of your business.
Let’s break down the basics.
1. What Is Income (Revenue) and How Do You Generate It?
Income, also known as revenue, is the money your business earns through its operations — before any costs are deducted.
For most small businesses, income comes from selling goods or providing services to customers. Whether you’re a sole trader, running a limited company, or managing a local SME, every sale or invoice contributes to your income. You might also have secondary income sources, such as rental income, commissions, or interest earned on savings.
At Bidwell Accountancy, we help clients track and analyse income streams so you can see where your money is coming from — and identify opportunities to grow your business. Effective sales strategies, smart marketing, and excellent customer service can all help to maximise income and maintain a steady flow of cash.
2. What Is Expenditure (Costs) and How Do You Manage It?
Expenditure refers to the costs involved in running your business and generating income. This includes:
Direct costs, such as materials or production costs
Indirect costs, like rent, utilities, salaries, marketing, software, and office supplies
Keeping your expenditure under control is vital for cash flow management and long-term profitability. Regularly reviewing your outgoings, negotiating with suppliers, and distinguishing between essential and non-essential costs are practical ways to protect your bottom line.
At Bidwell Accountancy, we work with clients to analyse expenses, identify cost-saving opportunities, and ensure their spending aligns with business goals.
3. What Is a Profit and Loss Report and Why Is It Important?
Your Profit and Loss (P&L) report — also known as an income statement — provides a clear snapshot of your business’s financial performance over a given period (such as a month, quarter, or year).
The P&L report details:
All income earned at the top of the report
A breakdown of expenditures below (such as cost of sales, operating expenses, and administrative costs)
The resulting net profit or loss for that period
By reviewing your P&L report regularly, you can make more informed financial decisions, identify trends, and plan ahead for taxes and future growth.
Our team at Bidwell Accountancy Ltd can help you interpret your P&L report and use it to guide your business strategy — from budgeting and forecasting to tax planning and profitability improvement.
Get Expert Help with Your Business Finances
If you’re new to financial management, understanding income, expenditure, and profit reports can feel overwhelming — but you don’t have to tackle it alone.
At Bidwell Accountancy Ltd, our friendly team of qualified accountants in Milton Keynes are here to simplify your accounts, explain key financial reports, and help you take control of your business’s financial future.
📞 Call us on 01908 380391 or E-Mail us at info@bidwellaccountancy.com
to find out how we can help you manage your income and expenditure more effectively.
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