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Pro Forma Template: What Are They? How To Use Them

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What Is A Pro Forma Template?

A pro forma template, also known as a pro forma financial statement, is a document used to project future financial performance based on hypothetical scenarios. In the context of accounting, pro forma templates will help you make decisions based on hypothetical scenarios as well.

They can also help you formulate a business plan, obtain investor funding, and more. By having a pro forma template ready, you can create your financial documents faster and more uniformly every time you need them.

Understanding A Pro Forma Statement

There are numerous types of pro forma documents. They may be required in certain situations, such as for public companies or during mergers and acquisitions. More or less, pro forma templates exist to give you a jumpstart on understanding your company’s financial health at a glance or when presenting to board members and stockholders.

You can use a template to create the following types of financial documents:

  • Income statements
  • Balance sheets
  • Cash flow statements
  • Owner’s equity statements
  • Notes to financial statements
  • Annual pro forma projections
  • Investment projections
  • Risk analysis
  • And more

While pro forma templates are relatively straightforward to use, ensure that you seek legal advice from corporate lawyers to help you develop the right set of templates the first time you draft them. For some pro forma templates, ensure that they meet all applicable accounting rules, including GAAP principles and state laws.

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Using A Pro Forma Template

The first step you should take with a pro forma template is to save a master copy of it in a safe, accessible location. There is always a chance for deletion across numerous duplications and file changes, which means that you should save it on a flash driver, external hard drive, or in the cloud. In case it gets deleted, you always have the original to back you up.

After saving your pro forma template, you will then take the following steps when using it:

  • Use a form to help you automatically collect information entered into the template
  • Enter financial data to help forecast income and cash flow
  • Create different scenarios to map out how cash flow is affected as variables change
  • Share it with an expert to make sure you are using it properly
  • Make a copy of the original to avoid an accidental deletion
  • Consider naming conventions for your files by statement type

The use of a pro forma template depends upon the type you are using. Some provide you with blank space to enter specific values, while others are just a set of guidelines. By inputting these variables, you can calculate your profit and loss under the template’s author’s guidelines.

As you can see, pro forma templates are simply financial documents that you can use for everyday business needs. It is imperative that you hire incorporation lawyers for specialized projects or one-time needs. Not addressing the critical details of business documents can negatively impact you.

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Pro Forma Template Samples

There are numerous resources available online regarding the development of pro forma templates that you case use to report on your business’s financial health. Spend some time looking for the right sample since several do not always address specific business needs.

Here are three templates that you can view online:

When using these templates, you can generally input the data you need to populate complete financial statements. However, you will not own the software that stores the templates, which means you need to download updates every time. There are several ways and methods available to make your own pro forma template to consider.

You should also be able to easily edit your pro forma template since you will need to update your associates, employees, and investors on-the-fly occasionally. The most straightforward way to make your pro forma is by ensuring that you have your business objectives in mind first.

How Do You Make Your Own Pro Forma?

The best way to make your own pro forma statement template is by starting with the right type of document in the first place. You can find samples online or hire corporate lawyers to draft the templates you use to create financial statements.

However, here are the next steps forward that you can take to make your own pro forma templates:

  • Review pro forma template samples to establish what should go into your financial documents
  • Consider the elements that should be included in every statement
  • Set a goal for sales over certain period of time
  • Figure out how much the cost of production will be to support those sales
  • Consider all other costs associated with running the business
  • Add all of these financial data points to the model to predict net cash flow
  • Set-up periodic reviews of your pro forma templates to ensure that they are still up-to-date

If you decide to find a pro forma template online, seek advice from a trusted colleague or attorney. Online templates tend to miss some critical notes when it comes to personalization and customization of your needs. However, some can be customized to your needs. The process of finding the right pro forma template can be frustrating, especially when there are question marks in your mind.

Simply put, it is more cost-effective to hire corporation lawyers the first time around you are drafting pro forma templates. Doing so will save you money, time, and stress over the long-run. You can even use planning with pro formas to start your business by hiring corporate lawyers to draft your documents instead of relying on templates created for hypothetical organizations or those serving other industries.

Planning With Pro Formas To Start Your Business

In the previous section, we addressed the importance of legal advice. However, the cost of hiring an attorney or vetting one can turn many business owners away from engaging in this critical part of the process. Keep in mind that legal mistakes can come back to haunt you later, which means that it is essential to get your pro forma templates right from the first day you use them.

ContractsCounsel has made this process as easy as possible on business owners:

  • Sign up for our service at no cost
  • Post your project to our platform
  • Begin receiving proposals from licensed and vetted attorneys

That is it. From one single location, you can receive numerous proposals and prices for your pro forma template project. Not only is the process convenient, but it also satisfies the need to draft your templates correctly and adequately for your jurisdiction while keeping your financial statements more uniform.

Working With A Lawyer For Business Formation

When starting a business, you will need to file Articles of Incorporation with your secretary of state’s office to receive a Certificate of Incorporation. However, there may be other entities that are better suited for your situation, and other legal requirements may apply, including the drafting of an operating agreement.

Working with a lawyer for a business formation is smart since you will effectively and efficiently avoid making legal mistakes, negatively impacting your company’s future. Corporate lawyers also have the experience and capacity to determine which documents you may need to stay compliant and prevent future disputes with clients, contractors, partners, and other third-parties you serve.

Get Pro Forma Template Help with ContractsCounsel

Instead of leaving your pro forma templates to basic internet searches and best guesses, get the right document that you need the first time around. Sign up for ContractsCounsel today with no upfront cost to you and start receiving proposals today.

ContractsCounsel is not a law firm, and this post should not be considered and does not contain legal advice. To ensure the information and advice in this post are correct, sufficient, and appropriate for your situation, please consult a licensed attorney. Also, using or accessing ContractsCounsel's site does not create an attorney-client relationship between you and ContractsCounsel.

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