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What is a Profit and 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”.
 
The updated Profit and Loss report is only available to specific users currently. Our product team is working on making the updated Profit and Loss report available on Plus, Premium, and Select plans in the near future.

If you’re interested in trying the updated Profit and Loss report, sign up for the waitlist.

The breakdown filter is only available for users using Accounting and on Plus, Premium and Select plans.
 
The Profit and Loss report does not include sales taxes paid on expenses and received on income as these are not considered the business’ earned profits. You can review sales taxes from a variety of reports, including the Sales Tax Summary report.
 
 

Access the Profit and Loss Report

You can run a Profit and Loss report by doing the following:
  1. Select the Reports section
  2. Then select Profit and Loss under Accounting Reports.
 

Updated Profit and Loss Report

The updated Profit and Loss report is only available to specific users currently. Our product team is working on making the updated Profit and Loss report available on Plus, Premium, and Select plans in the near future.

If you’re interested in trying the updated Profit and Loss report, sign up for the waitlist.
 
The updated Profit and Loss report is only available in the Billed (Accrual) accounting method. To view it using the Collected (Cash-Based) method instead, select the View Old Report button inside the Updated Profit and Loss banner.
 
To adjust your view of the updated Profit and Loss report, select either of the following:
Profit and loss report with filters displayed.
  • Quick Filters - Select either This Year, Last Quarter, or This Year vs Last Year
  • Filter
    • Date Range - Choose from This Month, Last Month, This Quarter, Last Quarter, This Year, Last Year, All Time, or Custom
    • Accounting Method - This is set to Billed (Accrual) by default
    • Currency - Toggle between multiple currencies, only one currency can be viewed at a time
  • Columns - Choose which columns to show or hide on the Profit and Loss report:
    • Total Breakdown
      • Total
      • Month
      • Quarter
      • Year
 
Additional options can also be accessed by selecting the More Actions button in the top right corner of the updated Profit and Loss report:
  • Download CSV - Download the report as a CSV file
  • Print or Save PDF - Print the report or save the report as a PDF using the print dialog
 

Overview

The Profit and Loss report is broken down into several sections, making it easy to review where your totals come from. Select any chevron symbol to expand any of these Account types, and select any total to view the entries making up that total on the General Ledger report:

Income

  • Sales or Revenue Accounts - Displays the total Sales and the total of each Revenue account of all billed invoices, income entries, credit notes, and journal entries
    • Adjustment - Displays any manual journal entries entered for the Sales parent account
    • Billed Expenses - Displays all rebilled expenses in the specified date range
    • Credit Notes - Displays all credit notes entries in the specified date range, deducted from total sales
    • Invoice / Payment
      • Set to Billed - Displays all invoices with issue dates during the date range, invoices with deposits will only be included if the invoice payment amount is greater than the deposit amount
    • Other Income - Displays the total of all other income entries logged during your date range
 

Cost of Goods Sold (COGS)

  • Displays the total of expenses marked as COGS, deducted from total Sales
  • If there are expenses under more than one COGS category, select the chevron icon to view a breakdown by COGS categories
 

Gross Profit and Margin

  • Gross Profit - Displays the total amount earned before operating expenses by subtracting COGS from total income
  • Gross Margin - Calculated as ((total income - COGS) / total income x 100%)
 

Expenses

  • Set to Billed - Displays all created expenses and bills during this date range, with totals for each expense's category, run an Expense report if needed for more details
 

Net Profit and Margin

  • Net Profit - The total amount earned (or lost) after expenses, by subtracting your Total Expenses from your Gross Profit
  • Net Profit Margin - Calculated as Net Profit / Total Revenue x 100
 

FAQs

How do deposits work on the Profit and 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 and 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.
 

Profit and Loss Report

To adjust your view of the Profit and Loss report, select Filters under Settings. From there, you can change: 
Filters on the profit and loss report.
  • Reset all - Select 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)
  • Group By - Choose to view your income and expenses by month (in landscape mode) or by quarter (in portrait mode)
  • Accounting Method - Run the Profit and 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, and includes any sent invoices and bills that are still unpaid
    • Collected (Cash-Based) - Contains income and expenses for transactions where cash has exchanged hands, and includes any sent invoices and bills that have a paid status
  • Breakdown - Only available with Accounting on Plus, Premium and Select plans, run the Profit and Loss Report either in By Transaction Type or By Account
    • By Transaction Type - Displays by transaction type (e.g., invoices, other income)
    • By Account - Displays by Account type (e.g., sales, discounts) on Accrual only
  • Currency - Toggle between multiple currencies, only one currency can be viewed at a time

Overview

The Profit and Loss report is broken down into several sections, making it easy to review where your totals come from:

Income

  • Sales or Revenue Accounts - Displays the total Sales or total Sales of each Revenue account of all invoices (if set to Billed) or payments (if set to Collected), as well as other income entries, credit notes, and journal entries 
    • Adjustment - Displays any manual journal entries entered for the Sales parent account
    • Credit Notes - Displays all credit notes entries in the specified date range, deducted from total sales
    • 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, select the total to view the specific entries
  • Cost of Goods Sold (COGS) - Displays the total of expenses marked as COGS, deducted from total Sales
    • If there are expenses under more than one COGS category, select the chevron icon to view a breakdown by COGS categories
 

Gross Profit and Margin

  • Gross Profit - Displays the total amount earned before expenses by subtracting COGS from total income
  • Gross Margin - Calculated as ((total income - COGS) / total income * 100%)
 

Less Expenses

  • Set to Billed - Displays all created expenses and bills during this date range, with totals for each expense's category (run an Expense report if needed for more details)
  • Set to Collected - Displays all created expenses and bill payments during this date range, with totals for each expense's category (run an Expense report if needed for more details)
  • Expense Refunds from bank reconciliation will be reflected in the Total Expenses at the bottom, run an Expense report to review all individual expense refunds instead
  • Manual journal entries written to expense accounts are not included in the Profit and Loss report


Net Profit

  • The total amount earned (or lost) after expenses, by subtracting your Total Expenses from your Gross Profit
 
Additional options can also be accessed in the top right corner of the Profit and Loss report:
  • More Actions
    • Export for Excel - Download the report as a CSV file
    • Print - Print the report or save the report as a PDF using the print dialog
  • Send... - Send the report to any specific email addresses
 

FAQs

How does the Profit and Loss report handle multiple currencies?
Converting between different currencies in reports is not available. For all reports in FreshBooks including the Profit and 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 and Loss report that includes all invoices sent in the selected reporting currency. 

How do deposits work on the Profit and 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 and 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 Profit and Loss report to display monthly totals?
  1. On the Profit and Loss report, select Filters under Settings
  2. Under Group By, select Month
  3. Select Apply
  4. On the report, select the Expand button in the top right corner, and you'll find a landscape view of the report with all the months visible.
    Enlarge button on profit and loss report.

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