If you’ve ever asked your bookkeeper or accountant “how’s the business actually doing?”, the answer usually starts with one report: the P&L statement. It’s the single clearest snapshot of whether your business is making money or losing it, and understanding it puts you back in control of your own numbers instead of just trusting whatever figure shows up at tax time.

Quick Answer: What Is a P&L Statement?

• What it is: A P&L statement (also called a statement of profit and loss, or income statement) lists your business’s sales and expenses over a period, and shows whether you made a profit or a loss.
• Why it matters: It’s the fastest way to see if you’re actually making money, not just moving it around.
• What it’s used for: Setting prices, spotting where costs are creeping up, applying for finance, and preparing your tax return.
• How often: Most businesses prepare one monthly, quarterly, or annually.
• Get it done properly: A Registered BAS Agent can make sure your P&L is accurate and GST-coded correctly, not just auto-generated and left unchecked.

What Is a P&L Statement?

A P&L statement, short for profit and loss statement, and also called a statement of profit and loss or an income statement, lists your business’s income and expenses over a set period, then shows the result: a profit or a loss. Per business.gov.au, a profit and loss statement “lists your sales and expenses” and “tells you how much profit you’re making, or how much you’re losing,” and businesses typically complete one every month, quarter, or year.

Unlike a bank balance, which just tells you what’s in the account right now, a P&L covers a defined period and shows the full trading picture behind that number, including sales you’ve made but haven’t been paid for yet, and bills you owe but haven’t paid.

What’s the Difference Between a P&L Statement and a Balance Sheet?

A P&L statement shows performance over a period (are you profitable this month, quarter, or year?), while a balance sheet shows your position at a single point in time (what you own and owe right now). A cash flow statement is different again, it tracks actual money moving in and out, which is why a business can show a profit on its P&L and still run into cash flow trouble if customers are slow to pay. Reviewing your P&L alongside your balance sheet and cash flow statement gives the fullest picture of how your business is really tracking.

What Does a P&L Statement Include?

A typical small business P&L runs through these lines, in order:

• Revenue (sales): total income from your goods or services
• Cost of goods sold (COGS): direct costs of producing what you sold
• Gross profit: revenue minus COGS
• Operating expenses: rent, wages, marketing, insurance, subscriptions, and other running costs
• Net profit (or loss): what’s left after every expense is deducted from revenue

One detail that trips people up: your P&L should clearly state whether the figures are GST-inclusive or GST-exclusive. If GST is coded incorrectly in your accounting software, both your P&L and your BAS can end up unreliable, which is why it’s worth having someone check the setup rather than assuming the software got it right by default.

How Often Should You Prepare a P&L Statement?

Monthly is the sweet spot for most small businesses, frequent enough to catch a cost blowout or a slow month before it becomes a crisis, without adding unnecessary admin. Quarterly works well if you’re already reviewing numbers alongside your BAS. Whatever the frequency, the report is only as reliable as the bookkeeping behind it, a P&L pulled from messy or uncategorised transactions will give you a wrong answer just as confidently as a right one.

Key Takeaways

A P&L statement is simply your income minus your expenses over a period, and it’s the fastest way to know if your business is genuinely profitable. Reading it alongside your balance sheet and cash flow statement gives you the complete picture, not just one slice of it. Get in touch with our Central Coast bookkeeping team if you’d like your P&L checked over or set up properly from the start.

Frequently Asked Questions

Sources

• business.gov.au – Set Up a Profit and Loss Statement
• Australian Taxation Office – Business Deductions
• Australian Taxation Office – Deductions for Other Operating Expenses

Figures and guidance current as of August 2026. Always confirm your specific tax treatment with a Registered BAS Agent or the ATO.