Plain English guide to profit and loss

December 20, 2023

When you’re in control of your profit and loss (P&L), you have a tighter hold on the reins of your profitability. Read our Plain English guide to P&L and learn how to boost your profits.

Here's our Plain English guide to profit and loss and what this report reveals about your finances.


What is profit and loss?


Your profit and loss statement is commonly called your ‘P&L’. It’s also sometimes referred to as your income statement or statement of earnings.


Your P&L is a breakdown of your company’s revenue (money coming into the company as sales and other income) and your expenditure (direct costs, overheads, expenses and other costs).


As a business, you obviously want to turn a profit and make money. Keeping a close eye on your P&L allows you to track your revenues and expenses over a set period, and look for ways to boost your profitability as a business.


How does profit and loss affect your business?


Being in control of your financial management is hugely important for any business. Your P&L is one of the main ways to track and analyse this financial performance.


To manage your P&L effectively, it’s important to focus on:

  • Revenue management – to keep your revenue (income) healthy, you need to be proactive about generating sales and monitoring your revenue streams. This helps keep your income steady and stable, while also identifying areas for growth and improvement.
  • Expense control – tracking and monitoring your operating expenses helps you spot where spending efficiencies could be made. Whether it’s overhead costs or inventory overspending, your P&L helps you spot unnecessary costs and boost profits.
  • Cost analysis – analysing your business costs can help you spot the opportunities for saving money. Whether it’s agreeing a discount for buying in bulk, or switching to a new supplier with cheaper rates, there are plenty of ways to cut costs and be more profitable.
  • Monitoring gross margin – reviewing the company’s gross margins helps you assess the profitability of each product or service. By pushing up prices, or cutting your production costs, you can boost those margins to drive up profits.
  • Financial reporting – preparing regular profit and loss statements is key to good financial management. Reviewing your P&L helps you assess the overall financial performance of the company and make better-informed decisions.


How can our firm help you with managing your P&L?


When you’re in control of your P&L, you have a tighter hold on the reins of your profitability.


As your adviser, we’ll help you run regular P&L reports as part of a monthly or quarterly package of management information. We can help you track, review and analyse your revenue and expenses to spot the best opportunities for boosting the company’s profits.


If you’d like to know more about the impact of profit and loss, we’ll be happy to explain.


Get in touch to chat about managing your P&L.


Selling your business: what happens once you exit?
June 18, 2025
You’ve sold your business! But what happens now!? We’ve outlined five potential pathways your post-sale life could take, and how they help you find new goals and lifestyles.
Selling your business: getting a good deal
June 18, 2025
Are you ready to sell your business? Here are six important ways to secure the best deal, through solid negotiation and a deep understanding of your core strengths as a company.
Getting help with your small business debt
June 18, 2025
Is your business debt getting out of control? Come and talk to us about strategies for reducing debt and getting cashflow under control.
What are your business goals for the year ahead?
June 18, 2025
What will you do differently this year to enable your business to thrive? Conducting a past-year review with our experienced advisors will provide valuable insights for this year's goal-setting.
ATO Announces 2025 Tax Compliance Priorities
May 29, 2025
The Australian Taxation Office (ATO) has unveiled its compliance focus areas for the 2025 tax year, highlighting the importance of accurate claims and thorough record-keeping, particularly for small businesses and individuals.
What makes a business expense tax deductible?
May 27, 2025
The ATO recently published some ‘wild claims’ that business owners had tried to make for business expenses. But what CAN you claim and what CAN’T you claim? We have the answers.
How’s your work-life balance? | Haslam Consulting & Accounting
May 27, 2025
Many business owners are reviewing their priorities and their work-life balance. Gallup reported that 39% of the owners they surveyed worked over 60 hours a week. How can you reclaim time and balance in your business?
How your accountant supports business development
May 27, 2025
Accountants don't just look after the financial side of your business. With our expertise behind your business development, we can help you turn your strategic ideas into real success stories.
How to optimise your business: six areas to focus on
May 27, 2025
We’re trading in uncertain times. But now’s the perfect moment to look at optimising your business. We’ve highlighted six key areas where you can improve your business efficiency. #optimisation #strategy #businesstips
Data-driven decision-making operations and inventory
April 7, 2025
Are you using data insights to drive your operational efficiency? We’ve got the lowdown on five ways that data-based decision-making takes your business to new levels of productivity.
More Posts