Business P&L Tracker — Methodology Handbook

The Business P&L Tracker is the income statement of a small business, kept live. You log three kinds of lines — income, cost of goods, operating expenses — and the tracker builds the profit-and-loss ladder for any period, compares it with the period before, shows where the money comes from (channels, products, customers) and where it goes (categories), keeps sales tax outside the numbers that are yours, and measures the year against the goals you set.

It is one tracker for every kind of small business. A freelancer, an Etsy shop, an agency, a creator and a café all read the same ladder; the business type you pick only decides which categories are offered first and whether products and channels are part of the story. The maths never changes.

Who it is for

Solo professionals and freelancers who invoice clients and want to know what is left after software, ads and fees.
E-commerce sellers on Etsy, Shopify, Amazon or their own store, who need revenue by channel and product, platform fees, postage and packaging as cost of goods, and a real margin.
Small agencies and studios with contractors and retainers.
Creators earning from platforms, sponsors, subscriptions and digital products.
Small retail and production — a shop, a workshop, a café — buying or making stock and selling it.

If you have outgrown a notebook but do not need full double-entry accounting, this is the layer in between.

The three kinds of line

Every transaction has a kind. It decides which step of the ladder the amount lands on.

Income — money the business received: a sale, a marketplace payout, a paid invoice, a sponsorship, ad revenue. Refunds are logged as income with the Refunds category and are subtracted from revenue.
Cost of goods (COGS) — what it cost to deliver the thing you sold: stock and materials, platform and payment-processing fees, postage and packaging, contractors who did the delivered work, manufacturing.
Expense — the cost of running the business regardless of any single sale: advertising, software, rent, utilities, payroll, insurance, equipment, professional services, travel, office supplies, bank fees, education, business taxes and licences.

The distinction between cost of goods and expense is the whole point of the ladder: it separates whether the product makes money (gross margin) from whether the business makes money (operating margin).

Each line also carries a category (a built-in one for its kind, or one you create), an optional channel (where the money came through), an optional product (what was sold or bought, with a quantity), a counterparty (the customer or the vendor), a currency, a date, a separate tax amount, and — on a sale — the fees kept by the marketplace or card processor before paying out. A line can also be set to repeat weekly, monthly or yearly (see Recurring lines).

The add form, field by field

Kind (required) — Income, Cost of goods or Expense; it decides which step of the ladder the amount lands on.
Amount (required) — the net figure, before tax, in the line's own currency.
Sales tax / VAT — the tax on top: collected from the customer on income, paid to a supplier on a cost. Pre-filled from the rate in Setup.
Fees kept (income only) — what the marketplace or card processor kept before paying out. Pre-filled from the channel's fee %.
Category (required; one is always selected) — a built-in for the kind, or your own via New category.
Channel, Product and Quantity — where the money came through and what was sold; picking a product fills the amount from quantity × unit price.
Customer / vendor — who paid or was paid; the Customers view is built from it. Date (required) — when the money moved.
Repeats — once, weekly, monthly or yearly.
Description and Notes — free text; the description is what the list and the calendar show.

The AI business coach can fill the form for you: tell it "log the Etsy payout of $412 from yesterday" or "add $250 rent on the 1st, monthly" and the add form opens with the line typed in for you to check and save — it never saves on its own.

The ladder — how every number is computed

All figures below are computed for the period you are looking at, from the transactions dated inside it.

Gross revenue = the sum of income lines, excluding the Refunds category.

Refunds = the sum of income lines in the Refunds category.

Net revenue = gross revenue − refunds. Every margin below is a share of net revenue.

Fees = the sum of the fees kept on sale lines — what Etsy, Shopify Payments, Stripe or PayPal deducted before the payout reached you. Booked on the sale rather than as a separate cost line, so a product's margin already knows about them. (A fee can equally be entered as a cost-of-goods line under Platform fees; both ways land on the same step of the ladder.)

Cost of goods sold = the sum of cost-of-goods lines.

Gross profit = net revenue − fees − cost of goods sold. Gross margin = gross profit ÷ net revenue × 100. A product-level number: what is left of each sale after delivering it.

Operating expenses = the sum of expense lines.

Operating profit = gross profit − operating expenses. This is the business's profit before income tax — the headline on the dashboard. Operating margin = operating profit ÷ net revenue × 100.

Income-tax reserve = operating profit × the income-tax reserve percentage from Setup, when profit is positive (zero when it is not).

What you keep = operating profit − income-tax reserve.

Margins are shown as a dash when there is no revenue in the period, rather than as a meaningless 0% or a division by zero.

Sales tax and VAT sit outside the ladder

Every line has a separate tax amount — the sales tax, VAT or GST on top of the net amount. On income it is tax you collected from the customer; on cost-of-goods and expense lines it is tax you paid a supplier.

Sales tax collected = the sum of tax amounts on income lines.
Sales tax paid = the sum of tax amounts on cost-of-goods and expense lines.
Owed to the tax office = collected − paid.

None of these touch revenue, cost or profit. The tax you collect was never the business's money, and adding it to revenue is the most common way a spreadsheet overstates a small business's income. When a sales tax rate is set in Setup, the form pre-fills the tax field on every income line at that rate; you can always overwrite it.

Periods and comparison

The dashboard, the report and the transactions list each remember their own period: this month, last month, this quarter, year to date (from the fiscal-year start month in Setup), this year, last year, the last twelve months, all time, or a custom range.

Wherever a previous period makes sense, the tracker compares against the same-length window immediately before: a month against the month before, a quarter against the previous quarter, a custom fortnight against the fortnight before it. Whole calendar months compare against whole calendar months. The percentage change is (this − previous) ÷ |previous| × 100, and is shown as a dash when the previous period has nothing to compare against.

The report notes when the period you are looking at is still running, because a half-month next to a full one is not a fair comparison.

Analytics — seven views of the same books

The Analytics tab is one set of filters over seven views. The filters narrow the lines (channel, category, product, customer) and the window (period, and what to compare it with: the previous same-length period, the same period a year earlier, or nothing); every view then runs the same arithmetic over the same lines, so a donut on one view and a trend on another cannot disagree. Clicking a slice, a bar or a name narrows every view to it; the chips under the filter bar show what is narrowed and remove it with one tap. Filters are remembered between visits.

Overview — the ladder for the window (net revenue, gross profit and margin, operating expenses, operating profit and margin, average sale, total costs, what you keep) with the change against the compared window; revenue, costs and profit over time as areas with the compared window's revenue as a dashed line; the rule-based insights (an operating margin that moved by three points or more, an expense category growing faster than revenue, a customer bringing half or more of revenue, a gross margin under 30% or over 60%, the best month, sales tax owed); the year's goals as rings — revenue, profit and the monthly spending limit from Setup, each with ahead/behind pace and the run-rate; and where the money comes from and goes, ranked.
Trends — the same ladder along the time axis, by week, month or quarter (chosen automatically from the window's length, or by hand). Where each unit of revenue went as 100%-stacked bars (profit, fees, cost of goods, operating expenses). The operating-margin line, with the compared window's margin dashed. Plan vs actual for the goal year: each month's revenue and profit against one twelfth of the annual goal. This year vs last year by calendar month. Cumulative profit since the first of January.
Structure — the waterfall from revenue through fees, cost of goods, gross profit, operating expenses and the tax reserve to what you keep. Donuts of revenue by channel and by category, of costs by category (fees, cost of goods and expenses together) and of fees by channel. The advertising return: ad spend in the window, ROAS (revenue ÷ ad spend), ads as a share of revenue. Tables of every revenue and cost line with its share of revenue and its change against the compared window.
Products (shops and product businesses) — revenue, units and profit per product. Profit is the product's revenue minus the fees kept on its sales minus its cost of goods: the cost-of-goods lines tagged with the product when there are any, otherwise units sold × the catalogue's unit cost, and the view says which. Best seller and most profitable are often different rows, which is the point. Products not sold in the window, with their last sale. A products-by-period table, tinted by amount.
Customers (services, agencies, creators and general businesses) — read from the customer field on sale lines: top customers, revenue per customer, new vs returning (a customer is new when their first-ever sale falls inside the window), the share carried by the top three names (a warning above half), repeat customers gone quiet, and a customers-by-period table. Sale lines without a customer are counted and reported as such.
Taxes — one fiscal year at a time (fiscal years follow the start month in Setup). Sales tax collected, paid and to remit; the income-tax reserve as the reserve percentage of each profitable quarter; the four quarters with their revenue, profit, sales tax, reserve and due date (from the estimated-tax reminder in Setup), marked running, closed or past due; sales tax by month; and every deductible category totalled for the year. Export tax year downloads all of it as one CSV for an accountant. It is arithmetic on your own rates, not tax advice.
Forecast — a run-rate projection: the average of your last 3, 6 or 12 full months, compounded month by month by the revenue growth and cost growth you set with two sliders. The next 12 months as a chart; five years as a table (the current year is actual months so far plus the projected rest); five scenarios around your growth assumption; and a runway — how many months the cash you enter lasts at the projected burn — when months run at a loss. Nothing is fitted or predicted; it is "if the next year looks like the last few months, plus X%".

Calendar

The Calendar tab draws the month as a grid, each day carrying its sale and cost lines, the day's net, the recurring lines projected ahead of their date, the estimated-tax deadlines (one per fiscal quarter, from the reminder setting), the goal year's last day, and your own events — a supplier call, a payout day, a market — with an optional time and amount. An event with an amount can be recorded on the books with one tap, prefilling the form for you to confirm. Beside the grid, the picked day lists everything on it with an add on this day button; with no day picked it lists what is coming up. Inside shared books the events belong to the books, written and seen by every member; in personal books they are yours.

Recurring lines

Rent, payroll, a software plan, a monthly retainer: set Repeats on the line when you add it (weekly, monthly or yearly) and the next occurrence is created by itself when its date arrives — always on the same day of the month, clamped to the last day of a shorter month, so a rent dated the 31st never drifts. Every series is listed in Setup → Recurring lines with what it brings or costs per month and its next date; a series can be stopped (the rows already on the books stay) or deleted whole. Occurrences are created for personal books only — inside shared books nothing is written automatically on anyone's behalf.

Goals and the run-rate

In Setup you can set an annual revenue goal and a profit goal for a given year. For that year the tracker computes:

Actual — revenue and operating profit year to date.
Pace = goal × months elapsed ÷ 12 — where the actual should be today to land exactly on the goal. The dashboard says whether you are ahead of or behind pace, and by how much.
Run-rate = actual ÷ months elapsed × 12 — where the year lands if the average month so far repeats.

A monthly spending limit works the same way for operating expenses: the Overview ring shows how much of the limit the window has used, scaled to the window's length.

Goals and the limit are stored in the reporting currency and shown in whichever currency you are viewing.

Channels, products and categories

Channels are where the money comes through — Etsy, a Shopify store, weekend markets, a retainer client. A channel can carry a platform fee percentage, which pre-fills the fees kept field on income lines through that channel. A channel shows its real logo when it is a known marketplace or platform (Etsy, Shopify, Amazon, eBay, Creative Fabrica, Gumroad, Patreon, Upwork and some sixty more are recognised by name) or when you type the shop's website in the channel form — any domain works, so your own store shows its own mark. Picking a glyph from the icon grid switches the logo off again.

Products are what you sell — a product or a service line — with an optional SKU, a unit price and a unit cost. A product is not tied to a channel: the same candle can sell on Etsy, in the Shopify store and at a market, and each sale line carries both the channel it came through and the product it was. That is what makes revenue by channel and revenue by product two different views of the same lines. From price and cost the tracker shows a unit margin = (price − cost) ÷ price × 100, and the report lists each product's revenue in the period beside it. Choosing a product on a new line fills the amount from quantity × unit price (income) or quantity × unit cost (cost of goods) when the amount is still empty.

Products are optional. A P&L needs only the lines; add products when you want unit margins, per-product profit in Analytics or a product filter. You do not have to type them: Import CSV in Setup → Products takes a Shopify Export products file (each variant becomes its own product, named "Title — Variant"; image-only rows are skipped; SKU, price and cost per item are read), an Etsy listings CSV, or any sheet with a name column and optional SKU / price / cost columns. Columns are guessed from the headers and can be corrected before the import; rows already on the list, by name or SKU, are left alone, so the same file can be imported again after the catalogue grew. A transactions CSV creates products by name too, so a sales export brings its products with it.

Categories come built in for each kind and are enough for most businesses. You can add your own for any side of the ledger, each with an icon of its own. A category you name is shown exactly as you typed it.

Removing a channel, product or category never changes a transaction's amount — the line just loses the link.

Getting lines onto the books

By hand — the add form, which opens on the kind, pre-orders categories for your business type, pre-fills tax at your sales-tax rate and, when a product is picked, the amount.
Scan a document — photograph a receipt, a supplier invoice or a marketplace payout screenshot; the tracker reads the kind, counterparty, net amount, tax, currency, date and a best-fit category and opens the form with them filled in for you to check. Nothing is saved until you press save.
Import a CSV — an Etsy, Shopify, Stripe, PayPal or bank export. The columns are matched to fields from the headers (you confirm the mapping), the rows become lines, and channels or products named in the file are created if they do not exist yet. Rows without a usable amount are skipped and counted.
Book paid invoices — invoices marked paid in the Invoices Tracker are offered as revenue lines with the customer, date, net amount and tax already filled in. Each invoice can be booked once.
Hand a line to the Expenses Tracker — any line can be sent to the personal Expenses ledger; it prefills the form there for you to confirm, it never writes behind your back.

Calculators beside the books

The header's calculator button opens the business calculators that answer the questions a P&L raises — break-even, e-commerce profit per order, CAC and LTV, self-employment tax, sales tax, a freelance rate. Each product in Setup has its own analysis button that opens the e-commerce profit and break-even calculators with that product's price and cost, the busiest channel's fee and last month's operating expenses already typed in. The calculators only read; nothing is written back to the books. On the business calculators' own pages, the "beyond the calculator" card points back here.

Currencies

Each line is stored in its own currency. Aggregates — the dashboard, the report, the goals — are converted into the currency you are viewing in at today's rates, and say so when the underlying lines are mixed. The transactions list shows each line in the currency it was recorded in. Goals typed in the viewing currency are converted into the reporting currency for storage.

Sample business

A new account opens on an example business — a handmade-candle shop selling on Etsy, its own store and weekend markets, with eight months of books — so every feature is visible before you have data of your own. The example disappears by itself the moment you add your first line, import a file or book an invoice; the Clear sample button removes it earlier.

Export

Every transaction, with every field the form collects (fees and repetition included), plus the P&L ladder for the period on screen, downloads as a CSV — on every plan, always. The Taxes view exports the fiscal year — deductible categories, quarters, sales tax and reserve — as a second CSV.

Free and Pro

The free plan keeps a limited number of transactions and everything built on them: the report, the margins, channels and products, goals, CSV import and export, booking invoices. Pro removes the transaction limit and adds document scanning, the AI business coach and shared books. Transactions already recorded never disappear when a plan ends; only adding new ones is limited.

The AI business coach

With Pro, a coach can answer questions about your books — why the margin moved, which expense to cut first, whether you are on pace for a goal, how much to set aside for tax. It reads the same numbers this handbook describes, computed the same way, and never invents a figure that is not in your data. It offers general business-finance guidance, not accounting or tax advice; for filing, deductions and anything jurisdiction-specific it will point you to a qualified accountant.

Shared books

The books can be kept with someone else — a business partner, an accountant. Inside shared books:

Editors add and change lines, channels, products and categories. Administrators also set the business settings (type, currency, tax rules, goals) and invite people. A viewer sees everything, can export everything, and changes nothing.
Everybody pays for themselves: editing requires the editor's own active Pro; a lapsed subscription turns them into a viewer without hiding a single line from anyone.
Every line records who added it, and shared lists show it.
Your personal books stay private and are never mixed into shared totals, and shared books never count against your personal free limit.
What does not happen automatically: nothing is copied between personal and shared books; a member who leaves keeps nothing, but the lines they added stay.

What the tracker does not do

It is not double-entry accounting: there are no balance sheets, no accounts receivable or payable, no depreciation schedules.
It does not file taxes or compute income tax; the reserve is a percentage you choose.
It does not track stock levels. Inventory purchases are cost-of-goods lines; a separate stock count is not kept.
A platform fee on a channel is a hint: it pre-fills the fees kept field on a sale through that channel, and you can always overwrite it.
The forecast is a run-rate on your assumptions, not a prediction; the tax view is your own rates applied to your own books, not a filing.

The workspace board and the weekly email

On the signed-in home (?view=dashboard) the tracker is a tile: this month's operating profit with its margin, revenue against costs, and the last months of profit as a line once there are three of them; the panel behind it lists revenue, costs, margin, sales tax to remit and the top channel. The tile reads your own books only — the example business never appears on the board, so it stays empty until your first line — and it converts into the currency the header shows.

The weekly digest email (Pro) carries one line for the business — revenue, costs, operating profit and margin this month, the change in profit against last month, sales tax to remit and the top channel — and can make the week's next step about it: books quiet for ten days, a tax date inside three weeks, or last month's operating expenses over your limit.