As most business owners already know, retained earnings are the profits invested back into a business. When a business generates profits, it may spend those profits on products, services or payroll to further grow and reach new customers. The money invested for this purpose is classified as retained earnings. While most business owners are familiar with the general concept of retained earnings, many don’t know how to view this financial metric in their books. Assuming you use Quickbooks, however, you can run a retained earnings report.
When viewing your business’s balance sheet in Quickbooks, you won’t see retained earnings. This is because retained earnings is considered a rollover from all your business’s past years of profit or loss. Therefore, the correct way to view your business’s retained earnings is to run a “Profit and Loss” report.
To run a “Profit and Loss” report in Quickbooks, log in to your Quickbooks account and click “Reports” from the menu on the left-hand side. In the “Go to” field, select “Profit and Loss,” followed by “Profit and Loss” report. You should see a new menu for the “Profit and Loss” report appear. Click the drop-down menu next to “Report period,” and select “All Dates.” Next, click “Run Report” so that Quickbooks will create a report for your business’s profits and losses. Once Quickbooks finishes with the report, choose “Net income” for the amount.
Assuming you followed these steps correctly, you’ll see a “Profit and Loss” report that includes all transactions that affected your business’s finances. Of course, this method shows your profits and losses from all previous years. You can run a “Profit and Loss” report by year by making a few changes. This is done by choosing “Reports” from the main main, followed by “Profit and Loss” in the “Go to” field. However, you’ll need to click “Customize” in the upper-right corner of the report menu, followed by “Rows/Columns.” Next, click the “Columns” drop-down menu and choose “Fiscal Years” or “Calendar Years.”
It’s a good idea to run a “Profit and Loss” report on a regular basis. Using this report, you’ll be able to see your business’s retained earnings, thereby giving you a better understanding of your business’s financial health. Without this information, you won’t be able to make educated decisions regarding your business’s finances and its future.
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