What it shows
The profit and loss account sets out turnover, cost of sales, overheads, tax and the final profit or loss for the period. It answers the question "did the company make money".
The basic layout
- Turnover (sales).
- Cost of sales and gross profit.
- Administrative expenses, such as rent, software, insurance and wages.
- Operating profit.
- Interest and tax.
- Profit for the financial year.
Get your accounts filed
We prepare your FRS 105 accounts and Company Tax Return and file both with Companies House and HMRC for one fixed fee.
File your accountsGet a quoteWhy it matters
- Corporation Tax is based on taxable profit, which starts from this statement.
- Lenders often ask for it.
- Dividends can only be paid from profits available for distribution.
- Companies House will require it on the public record under the reforms signalled for April 2027. See the changes.
Tips for micro-entities
- Code every transaction to a sensible category throughout the year. See bookkeeping.
- Separate personal spending from business costs.
- Review the statement monthly or quarterly, not just at year end.
Who prepares it
Your accountant produces it from your bookkeeping. Our micro-entity accounts service includes the full statement.
Frequently asked questions
Is a profit and loss account the same as an income statement?
Yes. They are different names for the same statement.
Do micro-entities have to file a profit and loss account publicly?
Not currently, but the government has signalled that this will change from April 2027.
Keep reading
How to Prepare Micro-Entity Accounts Step by Step
Preparing micro-entity accounts means gathering your records, drawing up a balance sheet and profit and loss account under FRS 105, adding the required notes and filing them before the deadline. Here is each step.
Micro-entity accountsHow to Read Micro Company Accounts
Reading micro company accounts is mostly about three questions: what the company owns, what it owes and whether it can pay its bills. The balance sheet answers all three.
Companies House and adminCompanies House Accounts Changes for Micro-Entities (2027)
Government reforms signalled for April 2027 will change how micro-entities file: a profit and loss account on the public record, no paper or WebFiling, and iXBRL-tagged accounts. Here is what is known and how to prepare.