What is a Profit and Loss (P & L) Statement and How to Make One

A Profit and Loss (P&L) statement, also known as an income statement, is one of the most important financial documents for any business. It helps you understand how much money you’re making, where you’re spending it, and whether your business is actually turning a profit. If you’re an entrepreneur, especially in the ecommerce space, having a clear P&L statement is essential for tracking your financial health and making smart business decisions.
Understanding a Profit and Loss (P&L) Statement
At its core, a Profit and Loss, or P & L, statement is a breakdown of your revenue, costs, and expenses over a specific period - usually a month, quarter, or year. It gives you a snapshot of how well your business is performing financially. Here’s how it works:
Start with your revenue - all the money your business brings in from sales. From that, you subtract the cost of goods sold (COGS), which includes the direct costs of making your product or delivering your service. The number you get is your gross profit; essentially, what’s left after you cover production costs.
Next, subtract operating expenses - items like rent, salaries, marketing, and utilities. What remains is your operating profit, which tells you how much you’re making before you factor in interest and taxes. Finally, once you account for additional expenses like loan payments or taxes, you arrive at your net profit - the final number that tells you whether you’re making money or not.
Simplify Your Profit and Loss Tracking with Clearco’s Free Template
If you’re feeling overwhelmed, don’t worry - there’s an easier way. Clearco offers a FREE Profit & Loss Statement Template that simplifies the whole process. It’s a plug-and-play tool that allows you to input your revenue and expenses quickly, so you can get a clear picture of your business’s financial health without all the stress.
This template will help you:
- Track your income and expenses in an organized fashion
- Understand your profit margins
- Spot trends that could affect your bottom line
- Make data-driven decisions to grow your business
Scaling Your Business with Clearco
Beyond just tracking your finances, Clearco is here to support your business’s growth. If you need funding to invest in inventory, marketing, or expansion, Clearco offers fast, flexible financing options tailored for ecommerce businesses. With Clearco, you can access capital quickly, without giving up equity, and make strategic investments to scale your business efficiently.
Running a business is challenging, but managing your finances doesn’t have to be. With a well-organized P&L statement and the right financial tools, you’ll be in a much stronger position to grow and succeed.

Alanna Andersen is a professional freelancer in the art of writing, editing, and content creation. In her past life, she was a Booking Agent and Tour Manager in the music industry and a restaurant General Manager in bustling downtown Toronto, Canada. Alanna is also the Crew Lead for Sofar Sounds Toronto, combining her love for music and people management. As an avid researcher, she enjoys learning new things and experiencing new cultures around the world.