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 and Loss report by doing the following:
- Select the Reports section
- Then select Profit and Loss under Accounting Reports.
To adjust your view of the Profit and Loss report, select Filters under Settings. From there, you can change:
- 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
The Profit and Loss report is broken down into several sections, making it easy to review where your totals come from:
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%)
- 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
- 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:
- 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
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.
Where are the sales taxes?
Both sales taxes paid on expenses and received on income are not included in the Profit and 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 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?
- On the Profit and Loss report, select Filters under Settings
- Under Group By, select Month
- Select Apply
- 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.