A profit and loss (P&L) statement is a financial statement that summarizes the revenues and costs incurred by your business during a specified period. You can use a P&L statement to analyze the financial health of your company.
A P&L statement is a spreadsheet-like document. It showcases the revenues of your business towards the top, and subtracts the costs to end up with the profit at the bottom.
What are the key elements of a P&L statement?
For a commerce focused company, there are four important components to a P&L statement.
The most important category. This shows all the money your business has generated over a period of time.
Slash categorizes all credits into your account (except those you initiate to fund it) as revenue. Example transactions that might get automatically categorized into revenue include:
Payouts from a marketplace like Amazon, StockX, or GOAT.
Incoming ACH transfers from a bank account that doesn't belong to you (could be a customer paying you).
Cost of Goods Sold
All expenses incurred to generate revenue should go here. If you run a reselling or e-commerce business, the main expenses you'll want to add to your COGS are:
Inventory costs (sneakers, tickets, miscellaneous merchandise, etc)
Your operating expenses are those that you incur to keep your business running, but not to directly generate revenue. Examples of expenses you'll want to add to your OPEX include:
Payroll (any expense you incur to pay employees)
This is a calculated row. It will simply take your revenue and subtract your Cost of Goods Sold (COGS) and Operating Expenses (OPEX). If a number is in parentheses, it means it's negative, but if it's not, it means it's positive and you've made money!