If your business lost money during the past accounting period, you need to show the loss on your financial records. The loss is recorded on your income statement. The income statement lists all your revenues and expenses over a given period of time, usually per quarter or per year. It also lists whether you made a profit or loss. By completing your income statement, you'll properly show the net loss for your accounting records.

Add up the value of all your company's sales over the past accounting period. Record this at the top of your income statement as your revenues.

Subtract the cost of the goods that you sold from your revenues and record this as your gross profit.

Subtract your operating costs from your gross profit. Operating costs are the costs of running your business. These include employees' salaries or your office's utility bills.

Subtract any interest that you needed to pay on your debt from your gross profit.

Subtract your owed income taxes from your remaining gross profit. This entire calculation should result in a negative number -- your net loss.

Record your total loss at the bottom of your financial statement under the heading net loss. Put brackets around the number as this is standard accounting practice for showing negative numbers.


You can claim your net loss against future income to reduce your taxes.