Income Statement Example + Free Template (Excel & Google Sheets)
📥 Want the template? Grab a ready-made income statement in our bookkeeping spreadsheet templates — built for Excel and Google Sheets, with the formulas already in place.
- An income statement (also called a profit and loss statement) shows your revenue, expenses and profit over a period.
- The core formula is simple: Revenue − Expenses = Net Income.
- A multi-step statement works down through gross profit → operating income → net income.
- It's different from a balance sheet, which is a snapshot of what you own and owe at one moment.
- You'll need one for taxes, loans and investors — and to actually understand if your business is making money.
- Skip the setup — download a ready-made template with the formulas built in.
The income statement is the report that answers the most important question in business: are you actually making money? Also called a profit and loss statement, it's one of the three core financial statements every business relies on. This guide explains what goes on it, walks through a full worked example, and points you to a free template so you can build your own in minutes.
What is an income statement?
An income statement is a financial report that summarises your revenue, expenses and resulting profit or loss over a set period — a month, a quarter or a year. It's also known as a profit and loss statement (P&L) or a statement of operations.
Unlike a balance sheet, which captures a single moment, the income statement covers a span of time and shows how the business performed across it. The bottom line — net income — is what's left after every cost has been taken out of revenue.
What does an income statement include?
A standard income statement works from the top line (revenue) down to the bottom line (net income), through these components:
- Revenue (sales): all income earned from your core business
- Cost of goods sold (COGS): the direct costs of producing what you sold
- Gross profit: revenue minus COGS
- Operating expenses: salaries, rent, marketing, depreciation and other running costs
- Operating income: gross profit minus operating expenses
- Interest and taxes: financing costs and income tax
- Net income: the final profit (or loss) after everything
Income statement example
Here's a simple worked example for a fictional small business, Acme Co., for the year ended 31 December 2026:
| Line item | Amount (USD) |
|---|---|
| Revenue | $250,000 |
| Cost of goods sold (COGS) | ($90,000) |
| Gross profit | $160,000 |
| Salaries & wages | ($60,000) |
| Rent | ($18,000) |
| Marketing | ($12,000) |
| Depreciation | ($5,000) |
| Other administrative | ($10,000) |
| Operating income | $55,000 |
| Interest expense | ($3,000) |
| Income before taxes | $52,000 |
| Income tax expense | ($11,000) |
| Net income | $41,000 |
Reading top to bottom: Acme sold $250,000, kept $160,000 after direct costs, spent $105,000 running the business, paid interest and tax, and finished with $41,000 of net profit. Every income statement follows this same shape, whatever the numbers.
Single-step vs multi-step
There are two formats. A single-step income statement lumps all revenue together and all expenses together, then subtracts one from the other in a single calculation — simple, and fine for very small or service businesses.
A multi-step income statement — like the Acme example above — separates out gross profit and operating income along the way. It takes a little more work but tells you far more: you can see your margins at each stage, which is invaluable for spotting where money is being made or lost.
Income statement vs balance sheet
These two statements are often confused. The difference comes down to time:
| Income statement | Balance sheet | |
|---|---|---|
| Shows | Profit over a period | Position at a point in time |
| Answers | Are we profitable? | What do we own and owe? |
| Key figure | Net income | Assets = liabilities + equity |
You need both for a full picture — but for month-to-month decision-making, the income statement is the one most owners look at first.
Free income statement template
You don't need to build one from scratch. Our simple small business bookkeeping template includes a ready-to-use income statement with the formulas already set up — just enter your figures and it calculates gross profit, operating income and net income for you. It works in both Excel and Google Sheets.
You'll find it alongside budgeting, cash-flow and other small-business tools in our spreadsheet templates collection. And if you'd rather hand the bookkeeping off entirely, that's what we're here for.
Frequently asked questions
What is an income statement?
It's a financial report showing your revenue, expenses and profit over a period of time. Also called a profit and loss statement, its bottom line — net income — is what remains after all costs are subtracted from revenue.
Is an income statement the same as a P&L?
Yes. "Income statement" and "profit and loss statement" (P&L) are two names for the same report. Statement of operations is another term for it.
How do you calculate net income?
Net income equals total revenue minus all expenses — cost of goods sold, operating expenses, interest and taxes. In the Acme example, $250,000 of revenue less all costs leaves $41,000 of net income.
What's the difference between an income statement and a balance sheet?
An income statement shows profit earned over a period; a balance sheet shows what a business owns and owes at a single point in time. You need both, but the income statement is the one that tells you whether you're profitable.
Grab our free-to-start bookkeeping template, or let us handle your income statements, bookkeeping and taxes end to end for a fixed monthly fee. Get a quote or message us today.
Related: our bookkeeping spreadsheet templates and the small business bookkeeping template. For US recordkeeping rules, see the IRS recordkeeping guidance.