A financial report that summarizes a company’s revenues, costs, and expenses over a specific period, showing whether the business made a profit or incurred a loss.
What is an Income Statement?
An Income Statement, also called a Profit and Loss Statement (P&L), is a key financial document that tracks a company’s financial performance over a set time, such as a month, quarter, or year. It lists all revenue earned during the period, followed by the costs of goods sold (COGS) and operating expenses, to calculate the company’s net income or loss.
This statement helps business owners, investors, and stakeholders understand how well the company is generating profit from its operations. For example, a U.S. business—whether an LLC, C-Corp, or sole proprietorship—can use its income statement to monitor trends, plan for growth, or prepare for tax filings.
For non-U.S. founders with a U.S. company, the income statement can be crucial for presenting financial results to investors, securing loans, and ensuring accurate reporting for both U.S. and home country tax obligations. It is also an essential tool when evaluating operational efficiency, identifying unnecessary costs, and improving profitability over time.
