A profit and loss report, or your income statement, shows the profitability of your business over a specific period. We most commonly report monthly or quarterly, and use these reports as a tool to talk with business owners about the financial health of their current operations.
Profit and loss reports are generally split into 2 sections:
Details of all income from your primary business activities (i.e. sale of products and services), any revenue from secondary activities (e.g. bank interest) and any other financial gains
Details of all expenditure on primary activities (e.g. material and labour costs), any secondary expenditure and any other losses during the period.
Simmons Livingstone & Associates business clients find profit and loss reports to be a useful tool for monitoring business activity. It highlights where their business is succeeding and where it is struggling. They can also be a tool for prospective investors.