On this page you can download two free, fully editable templates designed for different needs: a 12-Month Profit and Loss Statement in Excel that calculates gross profit, operating profit, tax, net profit and margins for every month automatically, and a Profit and Loss Statement in Word that compares the current period with the prior period – ideal for small businesses, freelancers and self-employed owners who need a simple, printable P&L.

What Is a Profit and Loss Statement?

A profit and loss statement is a financial report that summarizes the revenues, costs and expenses of a business during a specific period, such as a month, quarter or year. It answers one key question: is the business profitable? The statement starts with total revenue (the “top line”), deducts the cost of goods sold to show gross profit, deducts operating expenses to show operating profit, and finally deducts interest and taxes to show net profit (the “bottom line”).

The P&L is one of the three core financial statements, alongside the balance sheet and cash flow statement. It is usually included in financial reports and the annual report, and it is the starting point for comparing actual results with plan in a budget report.

Why Use a Profit and Loss Statement Template?

Whether you run a shop, an agency or a growing company, a clear P&L helps you make better decisions. A good template helps you to:

• Know your real profit each month instead of guessing from your bank balance.
• Track margins – gross margin and net margin show how efficiently you turn sales into profit.
• Spot rising costs early by seeing every expense category side by side.
• See seasonal trends with a month-by-month view and chart.
• Prepare for tax time with organized income and expense totals.
• Apply for loans or investment – banks and investors almost always ask for a P&L.
• Save time with built-in formulas instead of building a spreadsheet from scratch.

Free Profit and Loss Statement Templates (Editable)

1. Monthly Profit and Loss Statement Template (Excel)

This monthly profit and loss template in Excel gives you a full 12-month income statement on one sheet. Enter your company name, fiscal year and tax rate, then type your monthly figures into the revenue lines (product sales, service revenue and other revenue), cost of goods sold lines (materials and inventory, direct labour, freight and fulfilment) and operating expense lines (salaries and wages, rent and utilities, marketing, software, insurance, office and admin, professional fees and depreciation).

Everything else is calculated automatically: total revenue, total COGS, gross profit and gross margin %, total operating expenses, operating profit (EBIT), other income and interest, net profit before tax, income tax and net profit with net margin %. A Total column and a % of Revenue column summarize the full year, any month with a loss is highlighted in red, and a Revenue vs Net Profit chart shows how the business performed throughout the year.

Best for: small and medium businesses, bookkeepers and finance teams who want a monthly P&L with margins and a year-to-date total.

2. Profit and Loss Statement Template – Current vs Prior Period (Word)

This profit and loss statement template in Word is a clean, printable income statement for a single period. It starts with business details – business name, owner or preparer, period from and to, accounting basis (cash or accrual) and currency. The statement is then divided into income, cost of goods sold (including opening and closing inventory), gross profit, 14 common operating expense categories and a net profit summary.

Every line has columns for the current period, prior period and change %, so you can instantly see whether sales, costs and profit went up or down. The final sections cover notes and key observations (one-off items, significant changes and actions) and a review and approval block for the preparer, accountant and owner. It is perfect for self-employed profit and loss statements, loan applications and quarterly reviews.

Best for: freelancers, sole traders, self-employed owners, landlords and anyone who needs a simple P&L for a bank, mortgage lender or accountant.

What to Include in a Profit and Loss Statement

A complete P&L statement follows a standard structure from top to bottom:

How to Prepare a Profit and Loss Statement (Step by Step)

1. Choose the period. Decide whether you are preparing a monthly, quarterly or annual P&L.
2. Gather your records. Collect sales invoices, bank statements, receipts, payroll records and expense reports.
3. Record total revenue. Enter sales and other income for the period. Your sales reports are a useful source.
4. Calculate cost of goods sold. Use opening inventory + purchases − closing inventory, plus direct labour and freight.
5. Work out gross profit. Subtract COGS from revenue.
6. List operating expenses. Group overheads into clear categories such as rent, salaries, marketing and utilities.
7. Calculate operating profit. Subtract total operating expenses from gross profit.
8. Add other income and expenses. Include interest and any one-off items, then deduct income tax.
9. Review and compare. Check margins and compare with the prior period or budget, and write short notes explaining big changes.

Profit and Loss Formulas and Example

The Excel template uses these standard formulas, which you can also use to check any P&L:

• Gross profit = Revenue − Cost of goods sold
• Gross margin % = Gross profit ÷ Revenue × 100
• Operating profit (EBIT) = Gross profit − Operating expenses
• Net profit = Operating profit + Other income − Interest − Income tax
• Net profit margin % = Net profit ÷ Revenue × 100
• Operating expense ratio = Operating expenses ÷ Revenue × 100

Here is the full-year result from the sample data in the Excel template:

In this example, the business keeps 67 cents of gross profit from every dollar of sales, and almost 19 cents of net profit after all costs and tax. Tracking these percentages every month in a KPI report is one of the easiest ways to monitor financial health.

Tips for an Accurate P&L Statement

• Use the same expense categories every month so periods can be compared.
• Choose cash or accrual accounting and stay consistent.
• Separate personal and business expenses completely.
• Do not include loan principal repayments or owner drawings as expenses.
• Include depreciation for equipment and vehicles to show true profit.
• Record one-off items separately so they do not distort trends.
• Reconcile your P&L with bank statements and keep supporting documents for your audit file.

Profit and Loss Statement vs Balance Sheet vs Cash Flow Statement

A profit and loss statement shows performance over a period – income, expenses and profit. A balance sheet shows the financial position at a single point in time – assets, liabilities and equity. A cash flow statement shows how cash actually moved in and out of the business. A company can be profitable on its P&L but still run short of cash if customers pay late, which is why all three statements are used together in a complete financial report. For planning and control, compare your P&L with your budget every month.

Related Report Templates

• Financial Report Templates – income statements, balance sheets and financial summaries.
• Budget Report Templates – compare budget vs actual and explain variances.
• Expense Report Templates – record and reimburse business expenses.
• Sales Report Templates – track sales performance and revenue.
• Monthly Report Templates – summarize monthly business results.
• Annual Report Templates – present yearly performance to stakeholders.

Frequently Asked Questions (FAQ)

What is a profit and loss statement template?

A profit and loss statement template is a ready-made Excel or Word document that lists revenue, cost of goods sold, operating expenses and taxes, and calculates gross profit, operating profit and net profit for a period. You simply enter your figures instead of building the statement from scratch.

How do I make a profit and loss statement in Excel?

List your revenue lines, cost of goods sold lines and expense lines in rows with one column per month. Use SUM formulas for totals, subtract COGS from revenue for gross profit, subtract operating expenses for operating profit and deduct interest and tax for net profit. The free Excel template on this page already includes all formulas, margins and a chart.

Is a P&L the same as an income statement?

Yes. Profit and loss statement, P&L, income statement and statement of operations are different names for the same financial report that shows revenue, expenses and profit over a period.

How do I make a profit and loss statement if I am self-employed?

Record all business income for the period, then list your business expenses such as supplies, phone and internet, vehicle costs, rent and professional fees. Subtract total expenses from income to get net profit. The Word template on this page is designed for self-employed owners and includes a prior-period comparison and signature section.

What is the difference between gross profit and net profit?

Gross profit is revenue minus the cost of goods sold – the profit before overheads. Net profit is what remains after all operating expenses, interest and taxes have also been deducted – the true bottom line.

How often should I prepare a profit and loss statement?

Most businesses prepare a P&L monthly to track performance, with quarterly and annual statements for tax, lenders and investors. Monthly statements help you catch problems early.

Are these profit and loss templates free and editable?

Yes. Both templates are free to download and fully editable. You can rename categories, add rows, change the tax rate and add your logo, and they work in Microsoft Excel and Word, LibreOffice, Google Sheets and Google Docs.