How often should I run a Profit & Loss report?

At minimum, monthly. Run it on the 1st or 2nd of each month for the prior month, and compare it to the same month last year. Many business owners also run a year-to-date P&L weekly to stay on top of trends.

What's the difference between a P&L and a Balance Sheet?

A P&L (Income Statement) shows your revenue, expenses, and net profit over a period of time — like a movie of your finances. A Balance Sheet shows what you own, what you owe, and your equity at a single point in time — like a snapshot. You need both to understand your business's financial health.

Why does my P&L show a profit but I have no cash?

This is one of the most common small business financial puzzles. Profit and cash are not the same thing. You can be profitable on paper while being cash-poor if you have large unpaid invoices (A/R), if you're paying down debt principal, or if you've made large capital purchases. Run a Cash Flow Statement alongside your P&L.

What does "Uncategorized Income" or "Ask My Accountant" mean on my P&L?

It means transactions weren't properly categorized when they were entered. These are red flags — your P&L is inaccurate until every transaction has a real category. A QuickBooks cleanup can fix this.

Can I customize the P&L report in QuickBooks Online?

Yes. You can filter by date range, compare periods side by side, show percentages of income, group by class or location, and add or remove columns. Click "Customize" at the top of the report to access all options.

My P&L shows a loss but I feel like the business is doing well — what's wrong?

Several possibilities: expenses may be miscategorized (personal expenses in business accounts), depreciation may be overstated, or revenue may be understated due to missing invoices. A bookkeeper can review your P&L line by line and identify the discrepancy.

How to Run a Profit & Loss Report in QuickBooks Online

How to Run the P&L Report in QuickBooks Online

Running a Profit & Loss report in QuickBooks Online takes about 30 seconds. Here's exactly how:

In the left sidebar, click Reports.

Under the "Favorites" or "Business Overview" section, click Profit and Loss. (Or use the search bar at the top of the Reports page and type "Profit and Loss.")

Set your date range at the top. For a monthly review, select the prior month. For a year-to-date view, select January 1 through today.

Click Run Report (or it may update automatically).

To compare periods, click Customize → Columns → select "Previous Period" or "Previous Year."

ProAdvisor Insight

Most small business owners run their P&L once a year — right before tax time. That's a mistake. You should be reviewing it monthly, comparing it to prior months, and using it to spot trends before they become problems.

Understanding Each Section of the P&L

The Profit & Loss report flows from top to bottom — revenue at the top, net income at the bottom. Here's what each section means:

Income

All revenue your business earned during the period — from services, products, or any other source. This is the top line of your P&L.

Service RevenueProduct SalesConsulting FeesOther Income

Cost of Goods Sold (COGS)

Direct costs tied to delivering your product or service — materials, subcontractors, direct labor. Not all businesses have COGS (pure service businesses often don't).

Materials & SuppliesSubcontractor LaborDirect LaborShipping & Freight

Gross Profit

Income minus COGS. This is your profit before overhead expenses. Your gross margin percentage (Gross Profit ÷ Income) is one of the most important metrics to track.

= Income − Cost of Goods Sold

Operating Expenses

Overhead costs to run the business — rent, utilities, marketing, software, insurance, payroll. These are not directly tied to delivering your product or service.

Rent & LeasePayroll ExpensesMarketing & AdvertisingSoftware & SubscriptionsInsuranceOffice Supplies

Net Income

The bottom line — what's left after all expenses. Positive = profit. Negative = loss. This is the number your CPA uses for your tax return.

= Gross Profit − Operating Expenses

What to Look for Every Month

Running the report is the easy part. Knowing what to look for is where the real value is. Here's your monthly P&L review checklist:

Compare to Last Month

Is revenue up or down? Are any expense categories significantly higher? A 20%+ swing in any line item deserves investigation.

Compare to Same Month Last Year

Year-over-year comparison removes seasonal noise. If revenue is up 15% vs. last January, that's meaningful growth. If it's down, find out why.

Check Your Gross Margin %

Gross Profit ÷ Total Income = Gross Margin %. If this percentage is shrinking month over month, your costs are rising faster than your revenue. This is an early warning sign.

Look for "Uncategorized" Line Items

Any income or expense in "Uncategorized Income," "Uncategorized Expense," or "Ask My Accountant" means your books are incomplete. These need to be properly categorized.

Review Your Top 5 Expense Categories

Know what your biggest costs are. If payroll is 60% of revenue, that's your lever. If marketing is 5% and growing, watch it. Understanding your cost structure helps you make better decisions.

Check Net Income vs. Your Expectations

Does the bottom line match what you expected? If you feel like you're busy and making money but the P&L shows a loss, something is wrong — either in the books or in your pricing.

P&L Red Flags That Mean Your Books Need Attention

Income or expenses in "Uncategorized" accounts

Transactions in "Ask My Accountant"

"Opening Balance Equity" appearing anywhere

Negative expense amounts (usually a data entry error)

Revenue that seems too high or too low vs. your bank deposits

Net income wildly different from what you expected

The same expense category appearing twice with slightly different names

Personal expenses mixed into business expense accounts

If you see any of these red flags in your P&L, your books need cleanup before you can trust your financial reports. LedgerCore Solutions can identify and fix every issue — usually within 1–2 weeks.

Free Cleanup Consultation QuickBooks Cleanup Service