Simple P&L Template
| Line | Amount |
|---|---|
| Sales | [Amount] |
| − Cost of what you sold | [Amount] |
| = Gross profit | [Amount] |
| − Operating costs (rent, salaries, marketing, utilities…) | [Amount] |
| = Net profit (before tax) | [Amount] |
How to Read It
- Gross profit shows if your prices cover what each item costs.
- Net profit shows if the whole business makes money.
- Compare periods — month to month or year to year — to see the trend.
Profit Is Not Cash
A business can show a profit and still run short of cash, for example when customers pay late. Check your cash flow too.
Fill-In Worksheet
Answer these questions in a few words each. Your answers become this part of your plan.
- What are our total sales for the period?
- What did the items we sold cost us?
- What were our operating costs (rent, salaries, marketing, utilities)?
- What is left as net profit?
Examples (Illustrative)
| Year 1 | Amount |
|---|---|
| Sales | 45,000 |
| − Cost of what you sold | 18,000 |
| = Gross profit | 27,000 |
| − Operating costs | 19,200 |
| = Net profit | 7,800 |
| Line | Amount |
|---|---|
| Sales | 3,200 |
| − Cost of products used | 500 |
| = Gross profit | 2,700 |
| − Rent, salaries, utilities, marketing | 2,100 |
| = Net profit | 600 |
Common Mistakes
- Mixing startup costs with yearly costs. One-time startup spending is shown separately.
- Forgetting costs such as marketing, repairs, or your own pay.
- Confusing profit with cash. Check both.
Where It Fits in Your Business Plan
The profit and loss statement belongs in the Financial Plan and Projections section. See the full 3-year example in Financial Projections for Beginners.
Frequently Asked Questions
What is a profit and loss statement?
A summary of sales, costs, and profit over a period, such as a month or a year. It is also called an income statement.
What is the difference between gross profit and net profit?
Gross profit is sales minus the cost of what you sold. Net profit is what is left after all other costs too.
How often should I make a profit and loss statement?
Monthly is useful for running the business; yearly figures go in your business plan.
Is a profit and loss statement the same as cash flow?
No. Profit is sales minus costs. Cash flow is the timing of actual money in and out.
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