Income statement

The income statement is a table that answers a simple question: Did my business make or lose money during a given period? You take the money coming in (revenue), subtract the money spent (expenses), and what’s left is the profit, which is used to calculate taxes.

At a glance

Revenue (money coming in) minus expenses (money going out) over a period = profit or loss
It used to be called the “profit and loss statement”
Profit serves as the basis for calculating a business’s taxes
It’s your profitability dashboard (are you making money?)
Three levels of profit are listed from top to bottom: gross margin, operating income, and then net income after taxes

Why it matters

Think of the income statement as the score of a game: at the end of the period, did you score (profit) or suffer a loss? Example: You have $250,000 in sales and pay $100,000 in merchandise and $120,000 in expenses (rent, salaries); you’re left with $30,000 in profit. Of that $30,000, a Quebec company eligible for the small business deduction pays approximately 12.2% in taxes (combined rate for 2026), or nearly $3,660, according to the rates published by the Canada Revenue Agency. Checking it every month gives you an early warning if your profits are dwindling, whereas the balance sheet It shows what you own as of a specific date. Bankeo provides you with a free, vetted accountant or CPA who helps you understand it and improve your margins (what’s left after expenses are paid), and we’re here to support you every step of the way.

Frequently asked questions

What exactly is an income statement?

It’s a table that lists all the money coming in (revenue), subtracts all the money going out (expenses), and shows you whether there’s a profit or a loss over a given period, such as a year.

How is it different from the balance sheet?

The income statement covers a specific period (such as a year) and measures whether you made a profit. The balance sheet, on the other hand, is a snapshot at a single point in time of what the business owns and owes.

Who can help me understand my numbers?

An accountant turns these numbers into concrete decisions. Bankeo connects you with a verified accountant or CPA for free, at no cost to you, often within 48 hours, and we’re here to support you every step of the way.