How to Create an Earnings Statement

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Earnings statements are important financial documents that businesses must provide to the federal government. It is very important that these documents are completed accurately, as they have tax implications and your company could be audited if the figures and numbers do not add up properly. It is best to consult an accountant or financial adviser before submitting this paperwork. An accountant or financial adviser will be able to determine if you have correctly filled out the information and can help you during the actual process.

Write the beginning retained earnings on the first line of the earnings statement. For businesses that are only a few years old, this line typically reads 0, as there would be no earnings to report at the very start of a company.

Write the net income of the business on the second line. This number must match the income statement. If the business lost money, this will be subtracted from the beginning earnings.

Add the beginning earnings and the net income together. Write this number (the subtotal) on the third line of the earnings statement.

Write the amount paid for the year by the company as a dividend on the fourth line.

Subtract dividends from the subtotal. Write the resulting number in the final line. This number will be the final balance for the retained earnings for that period of time.