Are you making money? Find out here.
The Profit & Loss Statement (also called an Income Statement or P&L) is the most important report for understanding whether your business is financially healthy. It answers one simple question: after all the money coming in and all the money going out, did you make a profit or a loss?
Unlike your bank balance which only shows cash on hand, the Profit & Loss shows the full picture of your business performance over a period of time. It includes sales you've invoiced (even if not yet paid) and expenses you've recorded (even if not yet settled).
Why the Profit & Loss Matters
Business owners use this report to:
- Measure performance by comparing income against expenses over weeks, months, or years
- Identify problem areas by seeing which expense categories are consuming the most money
- Make informed decisions about pricing, hiring, cost-cutting, or investing in growth
- Secure funding as banks and investors typically request this report when evaluating loan or investment applications
- Prepare for taxes since the report summarises your taxable income and deductible expenses
Accessing the Report
To view your Profit & Loss Statement, navigate to Finance → Reports and select Profit & Loss Statement.
At the top of the report, you can select your date range:
- 2025 or 2024 for quick access to full-year data
- Custom to select any date range you need
Use the Download button in the top right corner to export the report for your records or to share with your accountant.
Understanding the Report Structure
The Profit & Loss Statement in Officaid is organised into clear sections that flow from top to bottom. Each section builds on the previous one to arrive at your final profit or loss.
Trading Income
This section shows all the money your business has earned during the selected period. In Officaid, trading income includes:
- Sales from invoices you've issued to customers
- Other for miscellaneous income that doesn't fall into the above categories
The Total trading income line adds up all income sources. Since Officaid doesn't currently track Cost of Goods Sold separately, your Gross Profit equals your Total trading income.
Operating Expenses
This section lists everything your business has spent money on. Officaid organises expenses into categories such as:
- Advertising Expenses for marketing and promotional costs
- Business Vehicles for vehicle-related expenses
- Employee Claims for reimbursements paid to staff
- Hardware / Software for technology purchases and subscriptions
- Meals & Entertainment Expenses for client entertainment and team meals
- Office Expenses for supplies, equipment, and general office costs
- Professional Services for fees paid to accountants, lawyers, consultants, etc.
- Rent, Utilities & Phone for premises and communication costs
- Salary/Bonus for employee compensation
- Depreciation Expense for the gradual reduction in value of your fixed assets over time
The Total operating expenses line adds up all expense categories.
Operating Income
This line shows what's left after subtracting your operating expenses from your gross profit:
Gross Profit - Total Operating Expenses = Operating Income
Operating income represents the profit generated from your core business activities, before accounting for any non-operating items like interest or one-time gains and losses.
Net Profit
The final line of the report shows your Net Profit (or Net Loss if the number is negative). This is the bottom line that tells you whether your business made or lost money during the selected period.
A positive Net Profit means your income exceeded your expenses. A negative number (Net Loss) means you spent more than you earned.
Accrual Basis Reporting
At the bottom of the report, you'll notice it says Accrual Basis. This means the report includes income when invoiced (not when paid) and expenses when recorded (not when settled). This gives you a more accurate picture of business performance because it matches income with the period it was earned, regardless of when cash changes hands.
How to Use This Report
Monthly review: Compare your P&L month over month to spot trends. Is revenue growing? Are certain expenses increasing faster than income?
Expense analysis: Look at your largest expense categories. Salary/Bonus and Rent are often the biggest items. Ask yourself whether these costs are delivering value proportional to what you're spending.
Profitability check: If your Net Profit is consistently low or negative, examine whether you need to increase prices, reduce costs, or both.
Year-over-year comparison: Use the date selector to compare this year's performance against last year. This helps you understand whether your business is growing, stable, or declining.
Frequently Asked Questions
The Profit & Loss includes income you've invoiced but haven't collected yet. If customers are slow to pay, you'll show profit on paper but have little cash in your account. Check your Accounts Receivable Aging report to see how much money is tied up in unpaid invoices.
Gross Profit is your income before subtracting operating expenses. Net Profit is what remains after all expenses are deducted. Gross Profit tells you how much you earned; Net Profit tells you how much you kept.
Yes. Click on any line item in the report to expand it and view the individual transactions that contribute to that total. This helps you investigate specific costs or income sources in detail.
Depreciation represents the gradual loss of value in your fixed assets (like equipment or vehicles) over time. Even though you're not paying cash for it each month, it's a real cost of doing business and reduces your taxable income. Learn more in Understanding Depreciation.
What's Next?
Now that you understand your Profit & Loss, explore these related reports:
- Balance Sheet to see what your business owns and owes
- Cash Flow Statement to understand why profit doesn't always mean cash
- Accounts Receivable Aging to see how much income is tied up in unpaid invoices