# SaaS income statement template Looking for a snapshot of your SaaS business’s financial position? Generate an income statement in minutes with this free and easy-to-use template. [Access template](https://docs.google.com/spreadsheets/d/1K9KzB2zHtg8c4bBkjoJoH0pDqYoKoQhPZjhgZY6lM_4/edit?usp=sharing) ## How to use the SaaS income statement template - **Tally your revenue**: Start by entering your company’s total revenue within your desired time frame. - **Subtract your costs**: Gather your COGS (Cost of Goods Sold), such as cloud hosting, infrastructure, and support costs. - **Know your net income**: Finish populating the sheet and watch as your income statement appears. ## Understanding your income statement Sometimes called a profit and loss statement (P&L), an income statement can give you a pulse on your SaaS business’ financial health and allow you to track recurring revenue, manage expenses, and evaluate your growth over time. ### What is a SaaS income statement? An income statement or profit and loss (P&L) statement is a financial document that shows how much a business has spent and earned over a specific period of time — usually a fiscal quarter or year. The statement is used to [understand a company’s profitability](/content/blog/assessing-healthy-profit-margin/index.html) and identify areas where cost savings can be made. ### What is included on a SaaS income statement? While every P&L differs based on the type of business, there are a few major categories you’re likely to find on most profit and loss statements: - **Revenue**: A P&L statement begins with revenue, or the money a business has earned from sales or other activities during the measured time period. - **Cost of goods sold (COGS)**: COGS is what it costs your company to deliver its core service or product. - **Gross profit**: COGS is subtracted from revenue to determine gross profit, or a business’s profit before accounting for operating expenses. - **Operating expenses**: These are expenses not related to delivering your core product or service. - **EBITDA**: Earnings before interest, taxes, depreciation, and amortization, which measures a business’s ability to generate cash flow. - **Interest expense**: Interest owed by a company borrowing money. - **Tax expense**: The amount the business paid on its income tax for a given year. - **Net income**: The amount of money a company has made after paying off all expenses. - **Loss**: If expenses are higher than the business’s revenue, the business will generate a loss instead of a profit. ### How do you analyze an income statement for a SaaS business? Business owners should use a profit and loss statement to understand if their business is profitable or on the path to profitability. Comparing P&L statements over time can highlight trends in revenue and expenses. ### What is horizontal analysis vs. vertical analysis? - **Horizontal analysis**: Looks at changes over time within a specific line item on the P&L statement. - **Vertical analysis**: Considers the size of expense items relative to a company’s revenue. ### What are common mistakes when creating income statements for SaaS businesses? - Miscalculating subscription revenue. - Not including all costs. - Incorrectly categorizing costs. - Missing out on tax credits. ### How often should you analyze your SaaS income statements? Most businesses generate a P&L statement monthly, quarterly, and during tax season to assess their financial performance. ### What is a pro forma income statement? A pro forma income statement forecasts your company’s future revenue, expenses, and profits over a specific period based on historical data. ### How are expenses forecasted on a pro forma income statement? Expenses are forecasted by reviewing past costs, analyzing trends, and adjusting for expected changes in operations or market conditions. ## Keep crunching your numbers ## Profit margin calculator See how close your business is to reaching profitability with our fast and easy-to-use profit margin calculators. [Read more](/content/tools/profit-margin-calculator/index.html) ## SaaS magic number calculator Quickly get a pulse on how sticky your subscription-based service is with our intuitive SaaS magic number calculator. [Read more](/content/tools/saas-magic-number-calculator/index.html)