August 4, 2026

How to Read a QuickBooks Profit and Loss Statement

Learn how to read a QuickBooks Profit and Loss statement, compare results and spot common bookkeeping errors before they cause problems.

Your QuickBooks Profit and Loss statement tells you whether your business made money during a specific period.

It shows your income, expenses and the profit or loss left at the end.

Sounds simple, right?

Unfortunately, accounting reports have a special talent for turning “Did we make money?” into a page full of numbers and mysterious negative amounts.

Let’s make your QuickBooks Online Profit and Loss report easier to understand.

What Is a Profit and Loss Statement?

A Profit and Loss statement is also called a P&L or income statement. It usually includes:

  • Income: Money earned by the business
  • Cost of Goods Sold: Direct costs related to what you sell
  • Gross Profit: Income minus direct costs
  • Operating Expenses: The general costs of running the business
  • Net Profit or Loss: What remains after expenses

A positive number at the bottom means the business earned a profit. A negative number means it had a loss.

That bottom line matters, but it doesn’t tell the whole story.

How to Run a Profit and Loss Report in QuickBooks Online

QuickBooks likes to rearrange the furniture occasionally, so your screen may look slightly different depending on which version you use.

Generally, you can:

  1. Sign in to QuickBooks Online.
  2. Select Reports.
  3. Open Standard reports.
  4. Search for Profit and Loss.
  5. Choose your reporting period.
  6. Run the report.

Always check the dates before analyzing anything. We have seen business owners briefly panic before realizing they ran a report for the wrong year.

What Dates Should You Use?

We recommend reviewing your Profit and Loss statement in two phases.

Phase 1: Review the current year by month

Run the report from January 1 to the current date and display each month in a separate column.

Look for:

  • Missing income or expenses
  • Sudden changes between months
  • Duplicate or unusually large transactions
  • Months with very little activity
  • Expenses in unexpected accounts

If your monthly rent disappears in April or appears twice in May, take a closer look.

You know what normally happens in your business. If a month looks strange, trust your instincts and investigate.

Phase 2: Compare two annual periods

Run the report for the most recent 12 months and compare the totals with the previous 12 months.

This shows how the business has changed overall.

For example, income may have increased from $500,000 to $600,000. Great news! But if expenses increased even faster, the business may be earning less profit despite generating more sales.

More revenue is exciting. Keeping more of it is even better.

If you want to get a little fancy, calculate your net profit percentage. Divide net profit by total sales and multiply the result by 100.

This tells you what percentage of every sales dollar remains as profit after paying the business expenses.

How to Read a QuickBooks Profit and Loss Report

Focus on these four areas:

  • Income: Are sales increasing, decreasing or holding steady? Investigate anything that appears to be missing.
  • Cost of Goods Sold and Gross Profit: If sales are rising but gross profit is not keeping up, costs such as materials, inventory or subcontractors may be increasing too quickly, or your prices may need attention.
  • Operating Expenses: Look for large changes, unfamiliar charges and personal costs recorded as business expenses.
  • Net Profit or Loss: This is what remains after expenses. Loan payments, equipment purchases, owner withdrawals and GST payments can change your bank balance without appearing as ordinary expenses.

If the numbers do not match what you know happened in the business, investigate before relying on the report.

Common QuickBooks Profit and Loss Errors

1. Uncategorized income or expenses

Uncategorized transactions mean money entered or left the business, but nobody determined what it was for.

A few recent transactions may be waiting for review. A large balance building all year is a different story.

These amounts should be investigated and assigned to the correct account.

“Uncategorized” is QuickBooks-speak for “someone needs to deal with this.”

2. Payments to the owner recorded as expenses

Money paid to a business owner is not automatically a business expense.

It might be an owner’s draw, shareholder loan, salary, dividend, reimbursement or repayment of money contributed by the owner.

We also see owner payments incorrectly recorded as subcontractor expenses.

These errors can make the business appear less profitable and create a tax-season cleanup project that nobody asked for.

3. GST payments recorded as expenses

A GST payment to the Canada Revenue Agency should not ever appear as a Taxes Expense on your Profit and Loss statement.

GST payments should always be recorded through the QuickBooks Online sales tax module. Recording the payment as an expense may:

  • Overstate expenses
  • Understate net profit
  • Leave the GST balance incorrect

That is a two-for-one bookkeeping error, which is not the kind of deal anyone wants.

4. Bank and credit-card accounts have not been reconciled

Connecting an account to the bank feed is not the same as reconciling it.

A reconciliation compares QuickBooks with the official bank or credit-card statement. This confirms that transactions and balances match.

To find the module, select the gear icon and then Reconcile. In some versions, select All apps, Accounting, then Reconcile.

Choose the account, enter the statement date and ending balance, then match the transactions. The difference should be $0.00 when you finish.

Complete this process monthly for each bank and credit-card account. It can uncover:

  • Missing or duplicate transactions
  • Incorrect amounts
  • Payments in the wrong account
  • Changed or deleted transactions
  • Incorrect account balances

The bank feed may look impressive, but downloading transactions is only the beginning. Reconciliation confirms that QuickBooks has the full story.

Spend Less Time Doing Bookkeeping and More Time Understanding Your Business

Don’t panic if you find one of these problems. We see them regularly, and they can be cleaned up.

But knowing where to look is different from having the time and bookkeeping knowledge to keep everything correct each month.

If your books are falling behind, your reports contain balances you cannot explain, or reviewing transactions has become another unpaid evening job, it may be time to hand it over.

Deximal provides paperless, cloud-based bookkeeping and tax services for Canadian businesses using QuickBooks Online. As a certified QuickBooks Online Elite ProAdvisor with more than 15 years of experience, we combine accounting knowledge with a tech-savvy approach to keep your books accurate, organized and ready for tax time.

Our team handles:

  • Bank and credit-card reconciliations
  • Transaction categorization
  • GST tracking and filings
  • Owner payments
  • Monthly financial reports
  • T2 corporate income tax returns
  • T1 income tax returns for sole proprietorships
  • Tax-ready bookkeeping and electronic recordkeeping

We also help you set up an app for taking pictures of receipts. Your receipts can be attached to transactions and stored electronically, instead of slowly taking over a shoebox, desk drawer or vehicle cup holder.

This gives you an organized digital record of your business purchases. If the CRA asks to review an expense, you are better prepared to provide the supporting receipt without searching through several years of paper.

Bookkeeping is only helpful if it’s accurate. Accurate reports are only helpful if you understand them.

Our Standard package includes an annual advisory meeting to review your financial statements. Our Premium package includes quarterly advisory meetings for business owners who want regular guidance.

These meetings help you understand changes in sales, expenses and profitability so you can make decisions with more confidence.

Because staring at a Profit and Loss statement and hoping it reveals its secrets is not a financial strategy.

Explore our cloud bookkeeping packages or book a no-pressure consultation.

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