What Is a Profit & Loss Statement?

A Profit & Loss statement (also called an income statement or P&L) shows your total revenue, total expenses, and the resulting net profit or loss over a period of time. It's one of the most important financial reports for any business — it tells you whether you're making money or losing it.

Why Calculate Your P&L?

• Understand if your business is profitable
• Identify which expenses are eating into your margins
• Make informed decisions about pricing and spending
• Prepare for tax season with clear financial summaries
• Track your progress month over month or year over year

How Often Should You Review Your P&L?

At minimum, review your P&L monthly. This gives you early visibility into trends — like rising expenses or declining revenue — so you can act before small problems become big ones. Many businesses also do quarterly and annual P&L reviews for strategic planning.