What is a profit and loss statement?

A profit and loss (or income) statement lists your sales and expenses. It tells you how much profit you're making, or how much you’re losing. You usually complete a profit and loss statement every month, quarter or year.

Use your profit and loss statement to help develop sales targets and an appropriate price for your goods or services. To do this, use financial tools like:

  • break-even
  • profit margin
  • mark up

Read more about analysing your finances.

Create your profit and loss statement

List all your sales and expense items. At the end of the sales and expense sections, add a row for gross profit (net sales) and for total expenses. If you’re doing yearly statements, you’ll add dollar amounts for each item for the next 3 years.

Use the list below as a starting point for your profit and loss statement for each year.

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Profit and loss statement template

An alternative spreadsheet version of this list is available to download and edit.

Complete your profit and loss statement

For each year, you'll need to fill in actual or estimated figures against each item. If you use estimated costs, you'll need to label them clearly.

You’ll also need to clearly state on your profit and loss statement whether your figures are GST inclusive or exclusive.

Calculate the:

  • gross profit
  • total expenses
  • net profit

Read next

Check our information on how to organise your finances.

Find financial terms in our glossary.