Track Your Finances With a Free Profit and Loss Statement

Start tracking your small business financials for free today with an easy-to-use profit and loss statement template created by our bookkeeping experts at Bench.

A profit and loss statement (also referred to as a P&L) is one of the most powerful tools you can use to understand your business’s financials. With a P&L, you can easily see your revenues, expenses, and operating costs over a specific period of time so you can analyze where and how your business can increase profits.

Calculate your profit in 5 steps

Bench’s team of small business bookkeeping experts created this easy-to-use free Excel P&L template—all you have to do is plug in your numbers and categorize your transactions to see where you stand. In no time at all you’ll be doing your own bookkeeping.

Here’s how the free template works:

  • Fill out the form to access the Excel template.
  • On the first tab, called “Chart of Accounts,” enter all the categories of income, expenses, and costs that you use in your business.
  • The second tab, called “Transactions,” is where you’ll enter your transaction details—namely date, description, amount, and category (matching the categories in your Chart of Accounts tab).
  • The third tab is where your P&L statement will display. Select a date range for the statement you’d like to see (for example, March 1 to March 28).
  • Voila, you have a profit and loss statement! Assess your business income and expenses with ease.

Track Your Finances With a Free Profit and Loss Statement

Start tracking your small business financials for free today with an easy-to-use profit and loss statement template created by our bookkeeping experts at Bench.

Get my free P&L generator

Enter your information to download a free Excel template to easily build your own profit and loss statement:

Gain financial clarity in 3 main areas:

1

Get a snapshot of your business

Don't spend time digging through your accounts trying to understand how profitable you are. With a profit and loss statement, you know exactly how you're doing at a glance.

2

Know the in's and out's of your expenses

Need to cut costs? Looking to see where you can increase spend? Review how much you're spending monthly on specific expenses to inform your decision making.

Manage your margins

Want to know how much your sales are actually making you? Routinely checking your profit margins as your sales fluctuate paints a picture of how ebbs and flows affects your finances.

Find out where you’re losing money

A profit and loss statement can reveal a lot about the health of your business. Because it shows your revenues minus your expenses and costs, you can easily chart your profits (or losses) over time to see whether things are trending up, down, or staying the same.

And if your business reaches the point where it it’s not cost effective for you to do your own bookkeeping anymore, try a free trial with Bench. We’ll do your bookkeeping for you.

What is the purpose of a profit and loss statement?

A profit and loss statement provides an overview of monthly, quarterly, or annual profits or losses. These financial reports, along with a balance sheet and cash flow statement, are what you’ll generate regularly to provide an ongoing picture of your business’s financial health. If you work with a CPA or accountant, are seeking investment, or trying to get a loan to help grow your business, you’ll need these reports so they can accurately assess your business’s level of risk and profitability.

Compared to a balance sheet, which provides a snapshot of your small business’s assets, liabilities, and owner’s equity, a profit and loss statement simply summarizes total revenue and expenses within a specific time. A cash flow statement, on the other hand, records your business’s cash-in from operations, investment, and financing.

Further reading: How to Read and Analyze a Profit and Loss Statement

What’s included in a profit and loss statement?

Here’s what these documents typically include:

  • Sales revenue: Total revenue for the time period you’re reporting on. This will depend on the type of accounting you use, cash or accrual, and how your business recognizes revenue.
  • Cost of goods sold (COGS): The cost of goods sold equals the total cost of producing the products or services your business provides. These are direct costs only: raw materials, labor (or employee wages), and shipping expenses.
  • Expenses: Also called operating expenses, this is the amount spent on things like rent, marketing and advertising, equipment costs, and other expenses you incur to keep your business running.
  • Gross profit: Your revenue minus COGS.
  • Net income: Your income before taxes.
  • Earnings per share (EPS): Your net income divided by the full number of shares in the specified reporting period.
  • Depreciation: The value lost by common assets like equipment, inventory, and property throughout the specified reporting period.
  • Operating earnings, or earnings before interest, tax, depreciation, and amortization (EBITDA): The earnings from the specified reporting period after all internal costs are subtracted, but before external costs (tax, depreciation, and amortization) are subtracted.

Why are profit and loss statements important for small businesses?

When it comes to being self-employed, consistently generating P&L statements is necessary for any business owner looking to improve (and sustain) their long-term financial health and business profit.

There are three ways a profit and loss statement achieves this:

  • They highlight financial trends: Profit and loss statements provide an accurate and up-to-date indicator of a business’s financial health, and help you track your performance over time.
  • They help you stay tax-compliant: This report can help you and your business stay in line with tax regulations and correctly file your income taxes.
  • They indicate profitability: Profit and loss statements clearly show your business’s profitability. In fact, Operating Earnings are considered by many accountants to be the best indicator of a business’s financial performance. In addition, businesses looking for investors will also need to present their P&L (although when a P&L is used externally—for example, to secure a loan or to court investors—it’s referred to as an income statement).

Income statements are vital for ratio analysis, valuation, and equity research; analysts and research houses use them to perform an in-depth corporate evaluation. Based on the data you generate via these reports, you can decide where to put your marketing dollars, which goods or services to cut or expand, and whether to increase your ad budget.

Further reading: Understanding Income Statements vs. Balance Sheets

Your P&L statement FAQs answered

A: If you have your income, expense, and cost information readily available, it takes roughly 10 minutes to complete.

A: A financial statement that summarizes the revenues, costs, and expenses a designated business has incurred during a specific period.

A: Any type of business, ranging from sole proprietors to C-corps, can benefit from filling out this template. This is especially true for business owners looking to apply for loans or grants.

A: This type of statement is generally prepared on a monthly, quarterly, or annual basis.

A: An “income statement” and a “profit and loss statement” are essentially the same document. However, when the report is meant to be shared outside of a business, it’s called an income statement. When it’s exclusively for internal use, it’s a profit and loss statement.

A: There are several formats a business can use:

  • Multi-step: This is the format described in this article. It’s called multi-step because you perform multiple calculations to arrive at the final number (your bottom line, or net profit)—calculate your revenues, subtract expenses, subtract costs, etc.).
  • Single-step: This is a simpler way of calculating profit and loss—you add up total revenues and subtract total expenses (including costs). One calculation = single-step.
  • Common size: A common size P&L will include an extra column of data that calculates each line item as a percentage of your total revenue.

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