What is a P&L Statement?
A Profit & Loss (P&L) Statement, also called an income statement, summarizes your business revenues and expenses over a specific period (monthly, quarterly, or annual) to determine net profit or loss. It's one of the three core financial statements (alongside the balance sheet and cash flow statement) and is essential for understanding your business profitability, making decisions, and reporting to stakeholders and tax authorities.
P&L Formula
Total Revenue − Total Expenses = Net Profit (or Loss)
P&L Statement Components
| Section | Components | What It Shows |
|---|---|---|
| Revenue | Total sales, service income, other income | All money coming into your business |
| COGS | Cost of products sold, direct labor | Direct costs to produce/acquire goods |
| Gross Profit | Revenue − COGS | Profit before operating expenses |
| Operating Expenses | Rent, utilities, salaries, advertising, office supplies | Costs to run your business day-to-day |
| Operating Income | Gross Profit − Operating Expenses | Profit from core business operations |
| Interest & Other | Interest expense, other income/expense | Non-operating items |
| Net Income | Operating Income − Taxes − Other | Bottom line profit or loss |
What's Included in Our P&L Template
- Monthly Version: 12 columns for monthly tracking plus year-to-date totals
- Annual Version: Full-year view with quarterly and annual summaries
- Pre-formatted Sections: Revenue, COGS, gross profit, operating expenses, net income
- Auto-calculations: Formulas automatically calculate subtotals and net profit
- Customizable: Add or remove line items to match your business
- Percentage Analysis: Shows each expense as percentage of revenue
- Excel & Google Sheets: Available in both formats
How to Use the P&L Template
Step 1: Gather Your Data
Collect your revenue and expense information from your accounting system, bank statements, and receipts for the period you're analyzing (month, quarter, or year).
Step 2: Enter Revenue
Enter total revenue from all sources. For multi-channel sellers, include Amazon sales, Shopify sales, Etsy sales, etc. Separate by platform if tracking profitability by channel.
Step 3: Enter COGS
Enter your cost of goods sold (product costs, inbound shipping, tariffs, packaging). This is calculated using the COGS formula: Beginning Inventory + Purchases − Ending Inventory.
Step 4: Calculate Gross Profit
The template automatically calculates gross profit: Revenue − COGS. This shows profit before operating expenses.
Step 5: Enter Operating Expenses
List all operating expenses: rent, utilities, salaries, advertising, software, shipping, customer service, etc. Categorize for better analysis.
Step 6: Review Net Income
The template automatically calculates net income (profit or loss). Review the results to understand your profitability and identify opportunities for improvement.
Using P&L for Decision Making
- Identify High-Expense Categories: If advertising is 30% of revenue, consider optimization
- Track Profitability Trends: Compare monthly P&Ls to spot seasonal patterns
- Analyze Revenue Mix: Which products/channels generate most revenue vs. profit
- Set Pricing: Ensure prices cover costs and generate desired profit margin
- Forecast Future: Use historical P&Ls to project future performance and budget
- Tax Planning: Identify deductible expenses and plan tax strategy
Download Our Free P&L Template
Choose your preferred format:
- Monthly P&L Template (Excel): Track 12 months with automatic calculations
- Annual P&L Template (Excel): Full-year view with quarterly breakdowns
- Monthly P&L Template (Google Sheets): Cloud-based version with real-time sharing
- Annual P&L Template (Google Sheets): Shareable annual profit tracking