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Whether you’re getting ready to launch a podcast or you’ve been podcasting for a while, there’s no time better than the present to write a profit and loss statement (P+L), especially if you plan on monetizing it. A P+L is a financial statement that shows how the revenues are transformed into the net profit or net loss during a particular period. There are many ways to prepare a profit and loss statement. You can use a spreadsheet, accounting software, or hire a bookkeeper to do it for you.
Every P+L has two main sections: revenue, or income, and expenses. Creating a P+L is like writing two lists, one list for the revenue and another list for the expenses. A P+L is typically for one calendar year. For example, if you began your podcast in November of 2019, you’ll create one P+L for 2019 with just two months and another P+L for 2020 with all twelve months.
You’ll want to begin with the revenue and include the item and dollar amount. The Revenue includes money-generating items, such as, ads, affiliate income, event sales, merchandise sales, maybe member subscriptions and even grants, loans, or expenses. Under the revenue list, add the expenses list.
For a podcast, the expenses will most likely be a longer list than the revenue list. Expenses include: accounting & legal fees, charity, cost of events, cost of goods sold (merchandise), dues & subscriptions, equipment, food & entertainment, insurance, internet service, interest & bank fees, marketing, office supplies, parking, toll fees, transportation, postage, recording studio fees, taxes, telephone service, educational training, uniform, vehicle operating costs, wages & salaries, website service fees.
Make sure to create a total for the revenue and a total for the expenses. At the bottom of the P+L, you’ll want to create a Net Income line to subtract the expenses from the revenue. If the total is a positive number, then it’s a Net Profit, but if it’s a negative number, then it’s a Net Loss. The first year you may not have a net profit, and that’s ok.
I highly encourage you to make a Projected P+L to give you a better understanding of the revenue and expenses for the upcoming year. A projected P+L is a great tool to pitch potential investors. They will use the P+L to assess if the growth potential affirms investment or grants.
Overall, a P+L can help you track your money for your podcast, gather info on how you are spending, help you create income goals, and even gain an investment or grants.
Have you created a P+L for your podcast yet? Was this helpful? If you’d like more information, write to us and reference P+L for Podcasting.
Written by: Gisel Martin, Business Strategist
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