Reading your Profit & Loss

Your Profit & Loss shows whether your business made money over a period: your revenue, minus the cost of what you sold, minus your expenses.

1. In the sidebar, under Reports, open Profit & Loss.
2. Under Period, choose This month, Last month, This quarter or This year. For other dates, choose Custom dates and fill in Date range from and Date range to. Click Update report. The report opens on this year to date.
3. Read it from top to bottom: Revenue, then Cost of Goods Sold and Gross Profit, then Operating Expenses, and Net Income at the bottom: your profit, or loss, for the period.
4. Click Export PDF to download it for your accountant or bank.

Cash basis or accrual?

The report shows which basis it uses under Report type.

Starter uses the cash basis: a sale counts when you receive the money. Payments you record against your invoices appear under Revenue as Invoice payments received, in the period they were paid. An invoice you have sent but not yet been paid for does not count. On a VAT invoice, only the amount before VAT counts as revenue.

Business, Growth and Premium use the accrual basis, with full double-entry bookkeeping: a sale counts when you issue the invoice, whether or not it has been paid.

The cash basis is a good guide to the money that has actually come in. If you need formal financial statements for a loan, investors or annual filing, your accountant will usually want accrual, so consider Business or above.

Tip: to compare two periods, run the report for each, for example This month and then Last month, and export both.