Most business owners only look at their Profit & Loss statement when their accountant asks for it at tax time.

That is a missed opportunity.

Your P&L is not just a tax report. It is one of the most powerful tools you have for understanding how your business is actually performing and where your money is really going.

Why the P&L Is More Than a Tax Report

Your Profit & Loss statement shows:

• How much money you made
• How much you spent
• What you kept

But beyond that, it tells a story about your business.

It shows what is working, what is not, and where small changes can create big improvements.

How to Read Income, Expenses, and Net Profit

Income
This is your total revenue for the period. Look for:

• Consistency month to month
• Growth trends
• Seasonal patterns

Expenses
These are the costs required to run your business. Review:

• Fixed expenses like rent, payroll, and software
• Variable expenses like marketing, subcontractors, and travel
• Unexpected spikes that need explanation

Net Profit
This is what remains after expenses.
Profit is not what is left in your bank account. It is what your business earns on paper after costs.

Consistent profit is what creates stability and growth.

Red Flags Business Owners Often Miss

• Strong revenue but shrinking profit
• Rising expenses without a matching increase in income
• Negative net profit month after month
• Large “uncategorized” or “miscellaneous” expenses

These are early warning signs that deserve attention.

How P&L Trends Guide Better Decisions

Looking at one month in isolation rarely tells the full story.

Trends show you:

• Which services are most profitable
• Where costs are creeping up
• When to adjust pricing
• When to invest and when to pause

This is how your numbers become a decision-making tool instead of a stress trigger.

Why Monthly Review Matters

Monthly review creates confidence.

Instead of guessing, you know:

• Where your business stands
• What needs adjustment
• How close you are to your goals

That clarity reduces stress and supports smarter growth.

Call to Action
If you want help reviewing your P&L and using it to guide your decisions, this is exactly what we support clients with through our monthly financial review services. https://aem-accounting.com/contact