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Of all the financial statements you can create in QuickBooks, the income statement is almost certainly the one you’ll run most often. That’s why it’s absolutely vital that you know how to create a QuickBooks income statement. And although creating and printing your QuickBooks income statement isn’t difficult, there are a number of different ways you can customize, save, and send this report. But with a little bit of setup work, you can create the perfect income statement for your business’s needs.
We’ll walk through how to create a QuickBooks income statement—for both QuickBooks online and QuickBooks Desktop—plus, everything else you’ll need to become an expert at this absolutely essential function.
Your tax preparer or loan officer might ask you for either an “income statement” or a “profit and loss statement.” What’s the difference? Is there?
Traditionally, accountants referred to the statement of earnings and expenses in a business as an income statement. Accountants, loan officers, and others who request a statement of earnings and expenses for your business and aren’t familiar with QuickBooks’s terminology will likely ask for an “income statement.”
In QuickBooks, you want to go to the “profit and loss statement” when asked for an income statement. Also referred to as a P&L, the profit and loss statement is exactly the same thing as an income statement. The two terms are used interchangeably. Neither name is more correct than the other, though some might argue that “profit and loss” is more accurate since the report shows more than just a business’s income.
This depends on the version of QuickBooks you’re using.
QuickBooks Online Accountant: You can find the income statement—or “profit and loss statement,” as QuickBooks calls it—by using the Search bar near the top right corner of your screen. Just type in “Profit and Loss,” and QuickBooks will show you all reports available with that title in a dropdown box. Choose the format you want, and QuickBooks will automatically produce the report for you.
QuickBooks Online: If you don’t have the accountant’s version of QuickBooks Online, it’s still easy to find your income statement. Click on the Reports tab on the left side of your screen, and then scroll down until you see “Profit and Loss.” Or, you can enter “Profit and Loss” in the Search bar at the top of the Reports screen and choose from all the available profit and loss formats.
QuickBooks Pro, Premier, or Enterprise Solutions (commonly collectively referred to as QuickBooks Desktop: In these versions, there are a couple of different ways to find your income statement:
By now, you’ll have noticed several different report format options for your QuickBooks income statement. Which one is the best one for you to use? The answer depends on why you are creating your income statement in the first place:
Once you’ve determined the basic format for your income statement, you’ll have the option to customize it further. QuickBooks has made customizing your income statement easy. With a few clicks, you can choose between cash and accrual basis, determine the date range for the report, and customize which columns appear on the report.
Many business owners wonder if they should produce cash or accrual basis income statements. For tax purposes, most small businesses need to create cash-basis income statements. A cash-basis statement shows your income as it is received and your expenses as they are paid. If you’re creating your QuickBooks income statement for tax- or loan-application purposes, ask your tax professional or business loan officer which basis they need.
For management purposes, we recommend using an accrual-basis income statement. The accrual-basis income statement shows your income as it’s earned and your expenses as they’re incurred. If you invoice your customers and they pay at some point in the future, the income is technically earned when you invoice them, not when they pay you. An accrual basis income statement will include the invoiced income on your income statement.
Similarly, if your vendors bill you and you pay them at some point in the future, those expenses are incurred as of the date of the bill, not when you actually pay it. An accrual basis income statement will include bills that are not yet paid in your expenses.
QuickBooks Online: Here, you can easily switch between cash and accrual basis income statements by clicking the radio button next to “Cash” or “Accrual” right above where your income statement begins.
QuickBooks Desktop: You’ll need to click on the Customize Report button at the top of your income statement to switch accounting methods.
Your income statement reflects activity for a specified date range. For tax purposes, you want to create an income statement in QuickBooks which shows the entire year. Your business loan officer might want an income statement for multiple years.
There are a couple of different ways to set the date range for your QuickBooks income statement. Unlike other customizations, the method for changing the date range on your income statement is the same in both QuickBooks Online and QuickBooks Desktop.
The default for income statements in all versions of QuickBooks is to show only the ”Total” column for the date range you choose for your report. You can use the “Display columns by” dropdown field in QuickBooks Online or the “Customize Report” button in QuickBooks Desktop to determine which columns appear on your income statement.
Customizing the columns on your income statement allows you to break down multiple time periods on the same income statement. For example, if your loan officer asks for income statements for the last three years, you can set the date range to include all three years, and then select the “Years” option for your columns. This will allow you to print one report for all three years, which in turn allows for easier side-by-side analysis of your business’s profitability and growth.
You can also show the profit and loss for your business by shorter time periods—days, weeks, months, and quarters—or by vendor, customer, employee, or product and service. This is extremely helpful for management and planning purposes.
Customize your QuickBooks income statement even further by setting specific filters, comparing your profit and loss for the date range you’ve chosen to another period, and by creating special headers and footers.
QuickBooks Online: Click the “Customize” button at the top right corner of your income statement to find filtering and header and footer options. You can use the dropdown box at the top of your profit and loss statement to choose to compare your numbers to another period.
QuickBooks Desktop: Click the “Customize Report” button at the top left corner of your income statement to find these same options.
Adding notes to your income statement can help explain anomalies in your financials or ask questions about certain line items.
QuickBooks Online: You can add and save notes in QuickBooks Online by clicking the “Add notes” link at the top of your income statement.
QuickBooks Desktop: Here, notes are called comments. Click on the “Comment on Report” button at the top of your profit and loss statement to add comments on the report.
Now that you’ve finished customizing your income statement, it’s time to run the report.
QuickBooks Desktop: The report refreshes automatically as you customize it. You can also click on the Refresh button at the top right corner of your profit and loss statement to make sure the customizations have taken effect.
QuickBooks Online: Here, you’ll need to click the “Run report” button near the top right corner of your income statement to produce the report according to your customizations.
After you’ve customized and run your income statement, you might want to save your customizations so you can access the customized report again later.
QuickBooks Online: You can save your customizations by clicking on the “Save customization” button at the top right corner of your income statement. Give your report a name so you can find it again easily. You can also choose to include your customized report in a group of reports and specify who should be able to access the customized report.
QuickBooks Desktop: You can find these same options for saving your customized income statement by clicking the “Memorize” button at the top of your profit and loss report.
QuickBooks Online: Clicking on the printer icon at the top of your profit and loss statement in QuickBooks Online will allow you to send your report to the printer of your choice. You can also click the document icon next to the printer icon to export your report to PDF or Excel, so you can save your income statement on your hard drive.
QuickBooks Desktop: The “Print” button at the top of the profit and loss statement in QuickBooks Desktop is used to print the report or to export it as a PDF. There’s a separate “Excel” button for exporting your income statement to Excel, if you want to save your income statement in that format.
There are two options for emailing your income statement. You can export it as a PDF or Excel worksheet, attach it to an email, and send it to your accountant, loan officer, or financial advisor. Or you can send the report from directly within QuickBooks.
QuickBooks Online: Click the envelope icon at the top of your report. A pop-up window will give you the option to email the report, print it, or save it as a PDF. If you want a record of sending your report, enter your email address in the “CC” field on the Email Report screen.
QuickBooks Desktop: Click the “Email” button at the top of your report. The pop-up window will allow you to customize your message. Depending on your “Send Forms” preferences (found under Edit > Preferences,) your report will be sent using your web mail or using QuickBooks email. If you send your report using your webmail account, the email will appear in your sent items folder.
Creating an income statement in QuickBooks isn’t difficult. Setting your customizations can take a little bit of time, but it’s well worth the effort to get the exact information you need. After you’ve designed your income statement the way you want it and saved your customizations (which can be surprisingly fun?), it only takes a couple of clicks to access your income statement again.