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      What is a Profit & Loss Report?

      The Profit and Loss Report (P&L) is a Report that shows your Net Profit by subtracting your total Expenses from your total Income over a specific period of time. This Report also goes by a few other names, so it might be referred to as an “Income Statement”, a “Statement of Operations”, a “Statement of Financial Performance” or “Earnings Statement”.

       

      You can run a Profit & Loss Report by doing the following:

      1. Go to the Reports section
      2. Select Profit & Loss under Accounting Reports.


      To adjust your view of the Profit & Loss Report, click on Filters under Settings. From there, you can change: 

      Filters on the profit and loss report.

      • Reset all - Click on this link to restore the filters back to the default settings
      • Date Range - Choose from This Year, Last Year, This Quarter, Last Quarter, or Custom to enter a specific date range (or if you’ve changed your Fiscal Year End date, choose from the extra options)
      • Income - Run the Profit & Loss Report by either Billed (Accrual) or Collected (Cash-Based) income:
        • Billed (Accrual) - Contains income and Expenses for all transactions, whether cash has exchanged hands or not. This includes any sent Invoices and Bills that are still unpaid
        • Collected (Cash-Based) - Contains income and Expenses for transactions where cash has exchanged hands. This includes any sent Invoices and Bills that have a paid status
      • Group By - Choose to see your Income and Expenses by Month (in landscape mode) or by Quarter (in portrait mode)
      • Currency - Toggle between multiple currencies, only one currency can be viewed at a time

       

      Overview

      The Profit & Loss Report is broken down into several sections, making it easy to see where your totals come from:

      Income

      • Sales - Displays the total of all Invoices (if set to Billed) or Payments (if set to Collected), as well as Other Income entries, Credit Notes, and Adjustments (Journal Entries)
        • Invoice / Payment
          • Set to Billed - Displays all Invoices with Issue Dates during the date range, Invoices with Deposits will only be included if Invoice Payment amount is greater than the Deposit amount
          • Set to Collected - Displays all Payments in the specified date range, including applied Prepayment and Overpayment Credits
        • Other Income - Displays the total of all Other Income entries logged during your date range, click on the total to see the specific entries
        • Credit Notes - Displays all Credit Notes entries in the specified date range, deducted from total Sales
        • Adjustment - Displays any manual Journal Entries entered for the Sales Parent Account
      • Cost of Goods Sold (COGS) - Displays the total of Expenses marked as COGS, deducted from total Sales

       

      Gross Profit

      • Displays the total amount earned before Expenses by subtracting COGS from total Income

       

      Less Expenses

      • Set to Billed - Displays all created Expenses and Bills during this date range, with totals for each Expense's Category
      • Set to Collected - Displays all created Expenses and Bill Payments during this date range, with totals for each Expense's Category
      • Custom Expense Accounts created by your Accountant are not clickable, export out your General Ledger to see the specific Journal Entries making up that total instead
      • Expense Refunds from Bank Reconciliation will be reflected in the Total Expenses at the bottom, run an Expense Report to see all individual Expense Refunds instead


      Net Profit

      • The total amount earned (or lost) after Expenses, by subtracting your Total Expenses from your Gross Profit

       

      Clicking More Actions in the top right will give you the option to Export for Excel, or Print your Report.

       

      Watch a Reports-specific webinar that covers some of our common reports including the Profit and Loss Report in more detail here.

       

      FAQs

      How does the Profit & Loss Report handle multiple currencies?

      For all Reports in FreshBooks including the Profit & Loss Report, a separate Report will be displayed for each currency. If you’ve sent Invoices in multiple currencies, you can use the Currency toggle under Filters to run the Profit & Loss Report that includes all Invoices sent in the selected reporting currency. Converting between different currencies in Reports is not available.


      Where are the Sales Taxes?

      Both Sales Taxes paid on Expenses and received on Income are not included in the Profit & Loss Report as these are not considered the business’s earned profits. You can review Sales Taxes from a variety of Reports, including the Sales Tax Summary Report.


      How do Deposits work on the Profit & Loss Report?

      Because Deposits are made prior to the delivery of goods/services in most cases, they are not initially recorded as Income. When the Profit & Loss Report is set to:

      • Billed - The full billed amount of the Invoice will be included as soon as an amount greater than the Deposit amount is added as a Payment on the Invoice. If the Deposit amount isn’t fully paid yet, no Income will be recognized for the Invoice.

      • Collected - Any amount added as a Payment for the Invoice will appear regardless of whether the full amount of the Deposit has been paid yet.


      How do I get my P&L to display monthly totals?

      1. Click on the filter icon next to the Profit and Loss title at the top left
      2. Under Group By, select Month
      3. Click Apply
      4. On the report, click on the Enlarge button in the top right corner, and you'll see a landscape view of the P&L with all the months visible.Enlarge button on profit and loss report.

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