Profit and loss template
A profit and loss statement (P&L, also called an income statement) shows whether your company made money over a period: what came in, what it cost to deliver, what it cost to run the business, and what's left. This free Excel template does it month by month for a year, with totals, margins and the year figure calculated for you.
Running a company of 30 to 200 people? Documents like this are now worth money.
It includes a filled-in example, so you can see how the numbers flow before you enter yours.
What's in the template
The P&L sheet has twelve monthly columns, a year total and each line as a percentage of revenue. Here are the summary lines from the Example sheet, filled in for a fictional 40-person company:
| Line | Jan | Feb | Mar | Year |
|---|---|---|---|---|
| Total revenue | 291,300 | 300,700 | 322,800 | 3,798,000 |
| Total cost of sales | 146,300 | 151,100 | 162,200 | 1,908,000 |
| Gross profit | 145,000 | 149,600 | 160,600 | 1,890,000 |
| Gross margin % | 49.8% | 49.8% | 49.8% | 49.8% |
| Total operating expenses | 95,100 | 95,100 | 96,100 | 1,143,200 |
| EBITDA | 49,900 | 54,500 | 64,500 | 746,800 |
| Profit before tax | 45,200 | 49,800 | 59,800 | 690,400 |
| Tax (25% assumed) | 11,300 | 12,400 | 15,000 | 172,600 |
| Net profit | 33,900 | 37,400 | 44,800 | 517,800 |
| Net margin % | 11.6% | 12.4% | 13.9% | 13.6% |
Underneath each total are the lines you fill in: three revenue lines and other income; materials, direct labour, subcontractors and delivery in cost of sales; and twelve overhead lines from salaries to bank charges. Rename any of them to match your business.
What goes where
- Revenue: what you've earned from sales in the month (excluding VAT if you're VAT-registered), whether or not the customer has paid yet.
- Cost of sales: costs that rise and fall with what you sell, such as materials, direct labour, subcontractors and delivery.
- Gross profit and gross margin: revenue minus cost of sales, in money and as a percentage of revenue. It shows whether your pricing covers the cost of delivering.
- Operating expenses (overheads): costs you'd pay anyway, such as office salaries, rent, software, insurance and marketing.
- EBITDA: earnings before interest, tax, depreciation and amortisation. It's gross profit minus overheads, and the figure buyers and lenders often start from.
- Net profit: what's left after depreciation, interest and tax.
How to fill it in
- Enter the first month of your financial year; the column headings follow it.
- Rename the revenue and cost lines to match your business, and keep them the same every month so months compare.
- Enter each month's figures from your bookkeeping system after month-end.
- Check the margins: a sudden change in gross margin usually means a pricing, cost or recording problem.
- Compare each month with your budget and the same month last year. The management accounts template does that side by side.
Profit isn't cash
A P&L records revenue when it's earned and costs when they're incurred, not when money moves. A company can show a healthy profit and still run short of cash if customers pay late or a tax bill lands. Keep a cash flow forecast alongside it.
Common mistakes
- Putting the same cost in cost of sales one month and overheads the next, which makes margins jump.
- Recording cash received as revenue instead of what was earned in the month.
- Including VAT in revenue or costs when you're VAT-registered. VAT you collect isn't your income.
- Leaving out annual costs (insurance, bonuses, audit fees) until the month they're paid, which flatters the other eleven months. Spread them.
- No comparison. A P&L means most next to a budget and last year.
Frequently asked questions
Is a P&L the same as an income statement?
Yes. Profit and loss account, P&L, income statement and statement of comprehensive income are names for the same report (the last is the formal accounting term).
Is this the same as my annual accounts?
No. Companies prepare statutory annual accounts in a set format for Companies House and HMRC. This is a management P&L for running the business month to month.
Should I include VAT?
Not if you're VAT-registered: record sales and costs excluding VAT. If you can't reclaim VAT, the VAT you pay on costs is part of the cost.