The template above does the arithmetic for you. Here is what the numbers it produces actually mean, and what to do once you have them.
A profit and loss statement, also called a P&L or an income statement, shows what your business earned and what it spent over a set period, and what was left at the end. Revenue sits at the top, costs in the middle, and profit at the bottom. The bottom number is the one most owners look at first, but the lines above it are where the answers actually live.
Gross profit is your revenue minus the direct costs of doing the work: subcontractors, materials, anything you would not have spent if the job had not happened. Net profit is what is left after the costs of simply being open, such as software, insurance, and professional fees. Two businesses with identical revenue can end up in very different places depending on which of those two is doing the damage.
Monthly. A statement you only see at year end tells you what already happened, at the point where the only thing you can still change is next year. Looking monthly turns it from a history lesson into something you can act on while the year is still in front of you.
Because profit and cash are not the same thing. A P&L counts revenue when you invoice it rather than when the money arrives, and it leaves out things that drain your account without being expenses, like loan principal or money you draw personally. I wrote about that gap in profit versus cash flow.
Compare it to last month, then the month before that. A single month tells you very little. A trend tells you whether pricing, costs, or volume is moving, and in which direction. If the numbers look wrong, the cause is usually how things have been categorized rather than the business itself, and that is the most common thing I find when I go through a new client's books for the first time.