Profit & Loss
Template Generator

A profit and loss statement — also called an income statement or P&L — is a financial report that summarizes a business's revenues, costs, and expenses over a specific period of time (a month, quarter, or year). It shows whether the business generated a net profit or net loss. Unlike a balance sheet, which is a snapshot of financial position at one date, a P&L covers a period of time. The P&L is one of the three core financial statements, along with the balance sheet and cash flow statement.

Gross profit is Revenue minus Cost of Goods Sold (COGS). It measures profitability before operating expenses. Net income is the bottom line — Revenue minus all expenses including COGS, operating expenses, interest, and taxes. Gross profit tells you how efficiently you produce or deliver your product or service. Net income tells you how much the business actually earned after all costs.

COGS (Cost of Goods Sold) includes only the direct costs of producing goods or delivering services — raw materials, direct labor, manufacturing overhead, and shipping/fulfillment costs. It does NOT include operating expenses like rent, marketing, or administrative salaries. For service businesses, COGS typically includes direct labor and any direct costs tied to delivering the service. COGS is subtracted from revenue first to show gross profit.

Operating expenses (OpEx) are the ongoing costs of running the business that are not directly tied to producing goods or services. Examples include: rent and utilities, employee salaries and payroll taxes, marketing and advertising, software subscriptions, professional fees (legal, accounting), office supplies, depreciation, and insurance. Operating Income (EBIT) equals Gross Profit minus total Operating Expenses.

Operating Income — also called EBIT (Earnings Before Interest and Taxes) — is Gross Profit minus Operating Expenses. It measures the profitability of the core business operations, before accounting for interest expense, interest income, and income taxes. EBIT is often used by lenders and investors to evaluate business performance independently of financing structure and tax situation.

A monthly P&L covers one calendar month of activity — useful for tracking month-over-month trends, identifying seasonal patterns, and monitoring cash flow. An annual P&L covers a full fiscal or calendar year — typically required for tax purposes, loan applications, and investor presentations. This template lets you enter monthly amounts and toggle to the Annual view, which multiplies all monthly figures by 12 to show annualized totals. For businesses with seasonal variation, building a full 12-month model in a spreadsheet is recommended.

Yes. The template is designed with small businesses and LLCs in mind, with pre-populated categories common to LLC operations: service revenue, consulting income, payroll, professional fees, and other typical small business line items. You can customize every label to match your chart of accounts. For multi-member LLCs, note that owner draws are NOT an expense on the P&L — they reduce equity on the balance sheet, not net income.

A P&L reports revenue when earned and expenses when incurred (accrual basis), regardless of when cash changes hands. A cash flow statement tracks actual cash inflows and outflows. A business can show a profit on its P&L but have negative cash flow if customers haven't paid yet (high accounts receivable) or if it made large capital expenditures. For a complete financial picture, review the P&L, balance sheet, and cash flow statement together.