Free profit and loss template for Excel (monthly P&L, income statement)
A profit and loss statement (P&L, also called an income statement) shows what a business earned and spent over a period and what was left: income, minus the cost of delivering it, minus operating expenses, plus or minus other items, equals net income or a net loss. This free Excel template lays it out the standard way, month by month for a year with a total and a % of income column, plus a single-period version that compares this period with the last. Below: what's in the file, the format line by line, a worked nine-month example that ties to our trial balance template, why one month in it looks different, and the mistakes that make a small-business P&L wrong.
Short answer: download the profit and loss template (.xlsx). Type the first month of your year, then enter each month's income and expenses as positive numbers. Gross profit, operating income, net income (loss) and the margins calculate for every month and the year. Optionally enter the net income from your trial balance and the status line tells you whether the P&L agrees. The Example is a fictional design studio, January to September 2026: income of 272,540.00, gross profit 251,140.00, operating expenses 186,151.65 and net income of 63,767.12 (a 23.4% net margin), the same net income as our trial balance template's example.
Download the free profit and loss template (.xlsx)
Four sheets: a blank Monthly P&L (12 months, Total, % of income), a blank Single period P&L (this period, prior period, change, change %), a filled-in Example and How to use. The accounts are the income and expense accounts from our chart of accounts template, with spare rows in every section. It uses only SUM, COUNT, ROUND, IF, IFERROR, AND, OR, N, ABS, DATE, YEAR, MONTH and TEXT, so it works in Excel, Google Sheets (File, Import), LibreOffice and Numbers. No sign-up, no email, no macros. It prints in landscape on one page width.
1. What's in the template
- Header: the business name, the first month of the year (the 12 month headings fill in from it) and an optional cell for the net income from your trial balance.
- Account list: the income, cost of sales, expense, other income and other expense accounts from our chart of accounts template (4000 Sales to 7900 Ask my accountant), grouped into sections with spare rows in each. Yellow cells are inputs, so rename, renumber or add lines to match your books.
- Monthly P&L: 12 month columns, a Total for the year and % of income for every line. Subtotals, gross profit, gross margin, operating income, net income and net margin calculate for each month.
- Single period: the same layout with This period and Prior period columns and the Change and Change % between them, for a year, quarter or month compared with the one before.
- Checks box (top): total income, net income (loss), the difference from the trial balance figure you entered, and a status line such as Net income 63,767.12 (agrees with the trial balance), Net loss ... or Net income differs from the trial balance by ....
Need only a simple one-period P&L? Use the Single period sheet and leave Prior period blank.
2. The profit and loss format, line by line
| Line | What goes in it | Example accounts |
|---|---|---|
| Income | Sales of goods and services for the period, less refunds and discounts given (enter those as a negative number) | 4000 Sales, 4100 Service income, 4900 Discounts and refunds given |
| Cost of sales | The direct cost of what you sold: goods, subcontractors on client work, shipping to customers | 5000 Cost of goods sold, 5100 Subcontractors, 5200 Shipping and delivery |
| Gross profit | Calculated: income − cost of sales. Gross margin is gross profit ÷ income | |
| Operating expenses | The costs of running the business whatever you sell: rent, payroll, software, insurance, marketing | 6000 Advertising to 6920 Employee benefits |
| Operating income | Calculated: gross profit − operating expenses | |
| Other income / other expense | Items outside day-to-day trading: interest earned, gains, depreciation in this chart, items waiting for your accountant | 7000 Interest income, 7600 Depreciation, 7900 Ask my accountant |
| Net income (loss) | Calculated: operating income + other income − other expense. Net margin is net income ÷ income |
The template's net income is before income tax. For a sole proprietor or single-member LLC that's normal: the business doesn't pay income tax itself, and the P&L feeds the owner's return (in the US, the IRS's Schedule C for most sole proprietors). Where you place a line such as interest expense or depreciation is a presentation choice; this template follows the chart of accounts template's categories, so 6375 Interest expense sits in operating expenses and 7600 Depreciation in other expense.
3. Worked example: nine months for a design studio
The Example sheet is the fictional design studio from our trial balance template, January to September 2026. It's a service business, so cost of sales is only subcontractors on client work. These are its year-to-date figures, the Total column of the sheet:
| Account | Jan–Sep 2026 | % of income |
|---|---|---|
| Income | ||
| 4100 Service income | 272,540.00 | 100.0% |
| Total income | 272,540.00 | 100.0% |
| Cost of sales | ||
| 5100 Subcontractors | 21,400.00 | 7.9% |
| Total cost of sales | 21,400.00 | 7.9% |
| Gross profit | 251,140.00 | 92.1% |
| Operating expenses | ||
| 6000 Advertising and marketing | 3,860.00 | 1.4% |
| 6050 Bank fees | 135.00 | 0.0% |
| 6100 Car and truck expenses | 1,210.45 | 0.4% |
| 6150 Contract labor | 6,525.00 | 2.4% |
| 6250 Insurance | 4,000.00 | 1.5% |
| 6300 Legal and professional fees | 2,750.00 | 1.0% |
| 6375 Interest expense | 742.18 | 0.3% |
| 6400 Office supplies | 1,964.32 | 0.7% |
| 6450 Rent | 16,650.00 | 6.1% |
| 6550 Software and subscriptions | 2,267.91 | 0.8% |
| 6600 Supplies | 2,846.10 | 1.0% |
| 6700 Telephone and internet | 1,704.06 | 0.6% |
| 6800 Utilities | 4,000.34 | 1.5% |
| 6900 Wages and salaries | 115,370.55 | 42.3% |
| 6910 Payroll taxes | 9,236.84 | 3.4% |
| 6920 Employee benefits | 12,888.90 | 4.7% |
| Total operating expenses | 186,151.65 | 68.3% |
| Operating income | 64,988.35 | 23.8% |
| Other income | ||
| 7000 Interest income | 28.77 | 0.0% |
| Total other income | 28.77 | 0.0% |
| Other expense | ||
| 7600 Depreciation | 1,250.00 | 0.5% |
| Total other expense | 1,250.00 | 0.5% |
| Net income | 63,767.12 | 23.4% |
Each line equals that account's adjusted balance on the trial balance template's example at September 30, so the P&L's net income of 63,767.12 is the same figure the extended trial balance shows, and the Example's status line reads agrees with the trial balance. Payroll (wages, payroll taxes and benefits: 137,496.29) is 50.4% of income, which is typical of a people business and the first line to watch.
4. Month by month, and why September looks different
| Month | Income | Gross profit | Operating expenses | Net income | Net margin |
|---|---|---|---|---|---|
| January | 27,790.47 | 27,790.47 | 19,983.47 | 7,810.45 | 28.1% |
| February | 28,985.76 | 25,181.32 | 20,974.33 | 4,209.93 | 14.5% |
| March | 32,272.80 | 31,083.91 | 19,848.06 | 11,239.05 | 34.8% |
| April | 31,077.51 | 27,748.62 | 20,790.89 | 6,961.09 | 22.4% |
| May | 32,870.44 | 32,870.44 | 19,188.80 | 13,684.68 | 41.6% |
| June | 30,479.87 | 26,913.20 | 20,901.89 | 6,014.57 | 19.7% |
| July | 26,296.36 | 24,394.14 | 20,635.90 | 3,761.21 | 14.3% |
| August | 28,089.29 | 25,235.96 | 21,254.01 | 3,985.37 | 14.2% |
| September | 34,677.50 | 29,921.94 | 22,574.30 | 6,100.77 | 17.6% |
| Total | 272,540.00 | 251,140.00 | 186,151.65 | 63,767.12 | 23.4% |
May is the best month and July the weakest, mostly because of income: the studio's work comes in unevenly, while rent, software and payroll hardly change. That's what a monthly P&L is for. A year-only total hides it.
September carries the four year-to-date adjusting entries from the trial balance example, all booked on September 30: 3,600.00 of unbilled income for September work, 286.40 for the September electric bill that arrived in October, 400.00 of prepaid insurance used and 1,250.00 of depreciation for January to September. Without them September's net income would be 4,437.17; with them it's 6,100.77. The first two belong to September. The depreciation (about 138.89 a month) and the extra insurance belong to earlier months, so those months are slightly overstated and September understated. If you look at month-to-month results, post depreciation and prepaid expenses monthly rather than once at the end of the quarter or year.
5. How to fill in a P&L, step by step
- Pick the basis. Cash basis: income when the money arrives and expenses when you pay. Accrual basis: income when you earn it and expenses when you incur them, including bills not yet paid, depreciation and prepaid costs used. The template works for either; just don't mix them.
- Make sure the books are complete for the period: every bank and card account reconciled to its statement (our bank reconciliation template is the workpaper), sales and bills entered.
- Get the totals per account. In QuickBooks Online or Xero, run the Profit and Loss report for the period (by month if you want the monthly sheet) and export it to Excel. Keeping books in a spreadsheet? Take the year totals from the bookkeeping template's Summary, the category totals from the cash book template, the deposited sales from the sales tracker or the account balances from the general ledger template.
- Enter the amounts as positive numbers on each account's line. Refunds and discounts given go in as a negative number.
- Tie it out. Type the net income from your trial balance in the yellow cell at the top. If the status says it differs, an account is missing or in the wrong section.
- Read it: gross margin, the biggest expense lines as a % of income, and the months or periods that move. On the Single period sheet, the Change % column points straight at what changed.
6. Common mistakes on a small-business P&L
Most errors on a homemade P&L come from money that moved through the bank but isn't income or an expense:
| Mistake | Why it's wrong | Where it belongs |
|---|---|---|
| Owner's draws as an expense | Money you take out isn't a cost of the business | Equity (3100 Owner's draws), on the balance sheet |
| Loan principal repayments as an expense | Only the interest is an expense; the principal reduces what you owe | Loan payable; interest to 6375 Interest expense |
| Transfers between your own accounts as income | Moving money from savings to checking earns nothing | Asset to asset; nothing on the P&L |
| Card payments as an expense | The purchases on the card are the expenses; paying the card off would count them twice | 2100 Business credit card |
| Sales tax collected as income | It's the state's money, held until you file | 2200 Sales tax payable |
| Equipment bought outright as an expense | Assets that last years are usually capitalized and depreciated (ask your tax preparer about the expensing rules that apply to you) | 1500 Equipment, then 7600 Depreciation |
These are the same lines our chart of accounts guide shows going to balance sheet accounts when a bank statement is coded.
7. P&L vs balance sheet vs cash flow vs trial balance
| Report | What it shows | Covers |
|---|---|---|
| Profit and loss (income statement) | Income, expenses and net income | A period: a month, quarter or year |
| Balance sheet | Assets, liabilities and equity; net income adds to equity | One date: the period end |
| Cash flow statement | Cash in and out by operating, investing and financing activity; explains why cash changed when profit didn't | A period |
| Trial balance | Every account's balance as a debit or credit; the worksheet both statements are drafted from | One date |
The studio's 63,767.12 of profit didn't all turn into cash: the owner drew 36,000.00, and 22,050.00 of income was still owed by customers at September 30. That gap is why a P&L alone doesn't tell you whether you can pay next month's bills.
Planning next year's profit and checking each month against it? The business budget template uses this example's nine months as its actuals.
Building the P&L from bank statement PDFs?
Utilly's converter reads a bank statement PDF, downloaded or scanned, into Excel, CSV, QuickBooks or Xero files and checks the rows against the statement's beginning and ending balance, so the income and expenses you categorize start from complete data. The preview is free with no sign-up. Try it on the sample bank statement first: every download of the sample is free because the data is fictional.
Method: the layout is the standard multi-step income statement (income, cost of sales, gross profit, operating expenses, operating income, other items, net income). The example business and amounts are fictional and match the adjusted income statement balances of our trial balance template's example. Template built and checked November 2, 2026: the Example sheet recalculates in LibreOffice to income of 272,540.00, gross profit of 251,140.00, operating income of 64,988.35 and net income of 63,767.12, and its status line reads that it agrees with the trial balance.
FAQ
What is a profit and loss statement?
A report of a business's income and expenses over a period, such as a month, quarter or year, and the net income or net loss left after them. It's also called a P&L, an income statement or a statement of operations.
Is a P&L the same as an income statement?
Yes. Profit and loss statement, P&L and income statement are names for the same report. Small businesses and accounting software tend to say profit and loss; textbooks and public companies tend to say income statement.
Is the profit and loss template free?
Yes. Download the .xlsx with no sign-up or email address. It has a blank 12-month P&L, a blank single-period P&L with a prior-period comparison, a filled-in example and instructions, and it works in Excel, Google Sheets (File, Import), LibreOffice and Numbers.
Should I use cash or accrual basis?
Either works in the template, but don't mix them. Cash basis records income when it's received and expenses when they're paid; accrual basis records them when they're earned or incurred. Many very small businesses use cash basis; ask your tax preparer which you should use.
Do owner's draws go on the profit and loss?
No. Draws are money the owner takes out, not a business expense, so they go to an equity account on the balance sheet. The same goes for loan principal repayments, transfers between your own accounts and paying off the business credit card.
What's the difference between gross profit and net income?
Gross profit is income minus the direct cost of what you sold. Net income is what's left after operating expenses and other income and expenses as well. The template shows both, and the margins, for every month.
Related guides
- Free sales tracker template for Excel (deposits, channels and goal)
- Free small business bookkeeping template for Excel (income, expenses and a bank check)
- Free business budget template for Excel (12 months, budget vs actual)
- Free balance sheet template for Excel (small business, with formulas)
- Free cash flow statement template for Excel (indirect method, with formulas)
- Free trial balance template for Excel (adjusted and extended)
Related tools
- Bank reconciliation checker: compare a bank statement to your books and list missing, duplicate and mismatched transactions.
- Receipt to CSV: turn PDF or photo receipts and invoices into CSV, Excel, or QuickBooks and Xero bill imports.
