See What Your Business Earned This Month
Use a profit and loss statement for the month to understand revenue and expenses on the reporting basis you use. Then review cash separately. The amount deposited into your bank is not automatically the amount earned, and the remaining bank balance is not the same as monthly profit.
Confirm the report covers a complete month
Check the date range, accounting basis and whether the accounts have been reconciled. Missing card expenses can overstate profit. An owner contribution incorrectly recorded as a sale can overstate revenue. Unapplied customer payments and duplicate deposits can also affect the report.
Understand what earned means
On an accrual report, revenue generally reflects activity earned during the period even if payment has not arrived. A cash basis report generally follows receipts and payments. Tax reporting can involve additional rules, so use the method agreed with your tax professional consistently. Avoid comparing one month on cash basis with another on accrual basis.
Read a simple illustration
If the completed report shows $18,000 in revenue and $13,500 in expenses, the reported profit is $4,500. That does not mean $4,500 is freely available to withdraw. Debt payments, owner activity, assets, taxes and collection timing may affect cash differently. A monthly review should explain both the profit calculation and the reasons the bank balance moved, giving you a fuller view of how the month actually performed.