A profit and loss (P&L) report shows your total income, your total expenses, and what’s left — your net profit or loss — for any period you choose. It’s the single most important financial report a sole trader can run, and most sole traders either don’t run it or only look at their bank balance instead. Your bank balance is not your profit. Here’s why that matters — and how to fix it in Sole.
Your Bank Balance Is Not Your Profit
Your bank balance at any moment includes:
- GST you’ve collected but haven’t remitted yet (it’s not your money)
- Payments for invoices you haven’t yet delivered (income you haven’t earned)
- Personal transactions mixed in if you’re not using a separate business account
And it excludes:
- Unpaid invoices you’ve sent but not yet received payment for
- Expenses you’ve committed to but not yet paid
A P&L strips all of this out and shows you the real picture.
What a P&L Report Shows
| Line item | What it means for a sole trader |
|---|---|
| Revenue | Total income from invoices (excluding GST if you’re registered) |
| Cost of goods sold (COGS) | Direct costs of delivering your service — materials, subcontractors |
| Gross profit | Revenue minus COGS — what you made before overheads |
| Operating expenses | All other business costs — insurance, tools, subscriptions, fuel, phone |
| Net profit / loss | What you actually made from your business after everything |
For most sole traders without inventory, COGS is either zero or minimal — gross profit and net profit are closely related.
How to Run a P&L Report in Sole — Step by Step
- Open Sole and tap Reports in the bottom navigation bar.
- Select Profit & Loss from the report list.
- Choose your date range. Sole defaults to the current month. You can select any custom range, a specific quarter, or the full financial year.
- Review the report. Income at the top, expenses below, net profit at the bottom. Each category is expandable to show individual transactions.
- Export or share. Download as PDF or CSV, or share directly with your accountant from the export screen.
How to Use Your P&L to Make Better Decisions
- Identify your most profitable work. If you break income down by client or service type, you’ll often find that 20% of your clients generate 60% of your profit. Sole’s category breakdown helps you see this.
- Spot expenses that are growing. Compare two months side by side. If fuel costs doubled but revenue stayed flat, that’s a problem to address.
- Plan for quiet periods. Comparing the same month across two financial years shows seasonality patterns — so you can save in strong months for slow ones.
- Set your pricing correctly. If your net profit is consistently thin, your pricing is probably too low or your expenses are uncontrolled. The P&L tells you which.
Using Your P&L at Tax Time
At the end of the financial year, your accountant needs a full picture of your income and expenses. Sole generates this as a P&L report for the full financial year — you share it directly from the app in PDF or CSV format. If you’ve set up accountant access, your accountant can pull it themselves without you needing to do anything.
Frequently Asked Questions
Does a sole trader need a profit and loss statement in Australia?There is no legal requirement for sole traders to prepare a formal P&L statement, but the ATO does require you to keep records that substantiate your income and deductions. A P&L report is the most practical way to organise this information. Your accountant will typically ask for one at tax time. Sole generates it automatically at any time.
What is the difference between gross profit and net profit?Gross profit is revenue minus the direct cost of delivering that revenue (cost of goods sold or direct labour). Net profit is what remains after all operating expenses — rent, insurance, subscriptions, marketing, and so on — are also deducted. For most sole traders without inventory, gross and net profit are closely related.
How often should I review my P&L?Monthly is best practice. It lets you catch expense blow-outs early, see which months are strongest, and adjust your pricing or workload accordingly. Sole’s dashboard shows a live running P&L so you don’t have to wait until month-end.
Can I share my P&L report with my accountant from Sole?Yes. Sole lets you export your P&L as a PDF or CSV and share it directly from the app. You can also set up accountant access so your accountant can view reports in real time without needing your login credentials.
Is a P&L report the same as a BAS?No. A BAS (Business Activity Statement) reports your GST collected and paid to the ATO for a specific quarter. A P&L report shows your overall business income, expenses, and profit over any period you choose. Sole uses the same underlying data for both — the figures are always consistent.
