The dictionary definition of an income statement, also known as the profit and loss statement, P&L, statement of income, and statement of operations, is "an accounting of income and expenses that indicates a firm's net profit or loss over a certain period of time, usually one year."
Simply put, your income statement tells anyone at-a-glance if your business is profitable or not. Typically, an income statement is a list of your revenue and expenses, with your company’s net profit listed at the end—often referred to as your "bottom line."
Every income statement calculates net profit with the following formula: Net Profit = Revenue - Total Expenses
By downloading our Profit and Loss Template, you'll receive an income statement sample with built-in formulas, which you can edit directly to make your own. To learn more about what a profit and loss statement is and how to read it, check out our article on the LivePlan blog: How to Read and Understand Your Profit and Loss.
The standard income statement format lists your:
Depending on your business and industry, your income statement may include additional sub-items within your operating expenses, like salaries and wages, insurance, marketing costs, equipment, rent, and utilities.
Your profit and loss statement is usually reported at the same time as your balance sheet and cash flow statement. Together, those documents make up the key elements of your company's financial plan.
If you need more help creating your income statement, take a look at LivePlan. LivePlan is a simple business planning and financial forecasting tool that makes business numbers simple.
With LivePlan, you can easily create complete, and guaranteed accurate financials without any prior business knowledge. LivePlan walks you step-by-step through the process—no formulas for you to mess with or accounting knowledge required. Plus, you'll get our world-class phone and email support to help you along the way—something you won't have access to when you use this free template.
Using spreadsheets to manage your financials is painful—it often requires building complex pivot tables or toggling between multiple documents. But with LivePlan, all the calculations are done for you using built-in formulas.
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Most people are intimidated by the financials, but LivePlan made planning simple, saved me so much time, and just knowing that the calculations are correct makes this tool worth every penny!"
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Noelle Notals LLC
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