Understanding the Profit & Loss Statement (Without Falling Asleep)
Let’s face it - most business owners didn’t start their company because they love financial statements. But if you want your business to grow and stay profitable, there’s one report you can’t ignore:
The Profit & Loss Statement (a.k.a. the P&L or Income Statement)
We promise — it’s not as scary as it sounds.
What is a Profit & Loss Statement?
A Profit & Loss Statement shows your income and expenses over a set period of time (usually monthly, quarterly, or yearly). It tells you if your business is making a profit or taking a loss.
In plain terms, it answers the question: “Are we actually making money?”
3 Main Sections of a P&L
Revenue (a.k.a. Income)
This is all the money your business brings in — like job payments, service fees, or sales.
Cost of Goods Sold (COGS)
These are direct costs tied to completing a job — like materials, labor, or subs
Operations Expenses
These are the day-to-day costs of running your business — things like rent, insurance, tools, fuel, admin support, or software.
Income - COGS - Expense = Net Profit (or Loss)
That final number? That’s your bottom line
Why It Matters (Especially for Contractors & Trades)
As a contractor or service pro, you might be doing great work and staying busy — but if your jobs aren’t priced right or your expenses are out of control, you could be working hard and losing money.
A monthly P&L gives you a clear snapshot of:
How much you’re making
How much you’re spending
Which expenses are dragging you down
If your business is actually profitable
It’s your scoreboard. Without it, you’re playing blind.
What a Clean P&L Can Help You Do:
Spot problem jobs or cost overruns early
Cut unnecessary expenses
Prepare for taxes with no surprises
Get financing or bonding for bigger jobs
Make confident decisions about hiring or growth
We Don’t Just Hand You a P&L — We Help You Understand It
At Ledger Balance Services, we don’t believe in sending a spreadsheet and walking away. We walk you through your numbers, highlight trends, and explain what’s working (and what’s not).
When your books are clean and your P&L makes sense, you’re empowered to run your business like a true CEO.