reaperinvest Profit & Loss Report
When to Use This Skill
- User wants to know if their business is profitable
- User needs a monthly or quarterly P&L statement
- User has transaction data (CSV, spreadsheet, or manual entries) and wants it organized
- User is preparing for tax season and needs a financial summary
- User wants to compare revenue and expenses across periods
Core Principle
A P&L REPORT MUST TELL THE TRUTH — CATEGORIZE EVERY DOLLAR, HIDE NOTHING, AND SHOW THE REAL MARGIN.
Financial Disclaimer
IMPORTANT: The financial reports generated by this skill are for informational and planning purposes only. They do not constitute accounting advice or audited financial statements. Always consult a qualified accountant or CPA for official financial reporting, tax filings, and compliance matters. Accuracy depends entirely on the data provided by the user.
Workflow
Phase 1: Collect Financial Data
- Determine the reporting period (month or quarter)
- Gather revenue data — ask the user for one of:
- CSV or spreadsheet file with transactions
- Manual list of income sources and amounts
- Bank/payment processor summary (Stripe, PayPal, Square)
- Gather expense data — same formats as above
- Confirm the business type (service, e-commerce, digital products, hybrid) to set appropriate categories
Phase 2: Categorize Transactions
- Sort all revenue into these standard categories:
| Revenue Category | Examples |
|---|---|
| Product Sales | Physical goods, digital downloads |
| Service Revenue | Consulting, freelance work, coaching |
| Recurring Revenue | Subscriptions, memberships, retainers |
| Affiliate/Commission | Referral fees, affiliate payouts |
| Other Income | Interest, refunds received, misc |
- Sort all expenses into these standard categories:
| Expense Category | Examples |
|---|---|
| Cost of Goods Sold (COGS) | Materials, manufacturing, fulfillment, platform fees |
| Marketing & Advertising | Ads, sponsorships, content creation |
| Software & Tools | SaaS subscriptions, hosting, domains |
| Contractor & Freelancer | Outsourced labor, VA, designers |
| Office & Operations | Rent, utilities, supplies, internet |
| Professional Services | Legal, accounting, bookkeeping |
| Travel & Meals | Business travel, client meals |
| Insurance | Business liability, E&O, health (if business expense) |
| Education & Training | Courses, conferences, books |
| Miscellaneous | Anything that doesn't fit above |
- GATE: If any transaction is ambiguous, ask the user to clarify before proceeding. Do not guess categories for amounts over $500.
Phase 3: Generate the P&L Report
- Build the report using this format:
PROFIT & LOSS STATEMENT
[Business Name]
Period: [Start Date] — [End Date]
═══════════════════════════════════════════════════
REVENUE
───────────────────────────────────────────────────
Product Sales $XX,XXX.XX
Service Revenue $XX,XXX.XX
Recurring Revenue $XX,XXX.XX
Affiliate/Commission $XX,XXX.XX
Other Income $XX,XXX.XX
───────────────────────────────────────────────────
TOTAL REVENUE $XX,XXX.XX
═══════════════════════════════════════════════════
COST OF GOODS SOLD (COGS)
───────────────────────────────────────────────────
[Itemized COGS] $XX,XXX.XX
───────────────────────────────────────────────────
TOTAL COGS $XX,XXX.XX
═══════════════════════════════════════════════════
GROSS PROFIT $XX,XXX.XX
GROSS MARGIN XX.X%
═══════════════════════════════════════════════════
OPERATING EXPENSES
───────────────────────────────────────────────────
Marketing & Advertising $X,XXX.XX
Software & Tools $X,XXX.XX
Contractor & Freelancer $X,XXX.XX
Office & Operations $X,XXX.XX
Professional Services $X,XXX.XX
Travel & Meals $X,XXX.XX
Insurance $X,XXX.XX
Education & Training $X,XXX.XX
Miscellaneous $X,XXX.XX
───────────────────────────────────────────────────
TOTAL OPERATING EXPENSES $XX,XXX.XX
═══════════════════════════════════════════════════
NET PROFIT (LOSS) $XX,XXX.XX
NET MARGIN XX.X%
═══════════════════════════════════════════════════
Phase 4: Add Analysis
- Below the report, include:
- Top 3 expense categories by dollar amount
- Gross margin assessment: Above 50% is healthy for services, above 30% for physical products
- Net margin assessment: Above 20% is strong, 10-20% is acceptable, below 10% needs attention
- Month-over-month or quarter-over-quarter trend if prior period data is available
- One actionable recommendation based on the numbers
Phase 5: Deliver
- Output the formatted P&L report
- Output the analysis summary
- Save to a file if the user requests it
Example 1: Freelance Designer — Monthly P&L
Input data provided by user: "January revenue: 3 client projects at $2,500, $4,000, and $1,800. Sold 12 Canva templates at $29 each. Expenses: Adobe Creative Cloud $55, Figma $15, Webflow hosting $29, hired a VA for 20 hours at $25/hour, Facebook ads $350, co-working space $200, business insurance $89, bought a Skillshare course for $45."
PROFIT & LOSS STATEMENT
Ava Park Design Studio
Period: January 1 — January 31, 2026
═══════════════════════════════════════════════════
REVENUE
───────────────────────────────────────────────────
Service Revenue (3 client projects) $8,300.00
Product Sales (12 Canva templates) $348.00
───────────────────────────────────────────────────
TOTAL REVENUE $8,648.00
═══════════════════════════════════════════════════
COST OF GOODS SOLD (COGS)
───────────────────────────────────────────────────
Canva Pro (template hosting) $13.00
───────────────────────────────────────────────────
TOTAL COGS $13.00
═══════════════════════════════════════════════════
GROSS PROFIT $8,635.00
GROSS MARGIN 99.8%
═══════════════════════════════════════════════════
OPERATING EXPENSES
───────────────────────────────────────────────────
Marketing & Advertising $350.00
Software & Tools $99.00
- Adobe Creative Cloud $55.00
- Figma $15.00
- Webflow $29.00
Contractor & Freelancer $500.00
- Virtual Assistant (20hrs x $25)
Office & Operations $200.00
- Co-working space
Insurance $89.00
Education & Training $45.00
- Skillshare course
───────────────────────────────────────────────────
TOTAL OPERATING EXPENSES $1,283.00
═══════════════════════════════════════════════════
NET PROFIT $7,352.00
NET MARGIN 85.0%
═══════════════════════════════════════════════════
Analysis:
- Top 3 expenses: Contractor ($500), Marketing ($350), Office ($200)
- Gross margin: 99.8% — Exceptional. Typical for service businesses with minimal COGS.
- Net margin: 85.0% — Very strong. Well above the 20% benchmark for healthy businesses.
- Recommendation: Marketing spend ($350) generated $8,648 in revenue. If those Facebook ads are driving client inquiries, consider increasing ad budget to $500-$700 to test whether revenue scales proportionally.
Example 2: E-Commerce Candle Business — Quarterly P&L
Input data: Q4 2025 — sold 847 candles at $32 average price, 45 gift sets at $78 each. COGS per candle $9, per gift set $28. Expenses: Shopify $79/mo, shipping supplies $1,240, Instagram ads $2,100, hired a photographer $800, packaging designer $450, PO Box $45/mo, product liability insurance $125/quarter, attended a craft fair (booth fee $350 + travel $280).
PROFIT & LOSS STATEMENT
Ember & Sage Candle Co.
Period: October 1 — December 31, 2025 (Q4)
═══════════════════════════════════════════════════
REVENUE
───────────────────────────────────────────────────
Product Sales (847 candles) $27,104.00
Product Sales (45 gift sets) $3,510.00
───────────────────────────────────────────────────
TOTAL REVENUE $30,614.00
═══════════════════════════════════════════════════
COST OF GOODS SOLD (COGS)
───────────────────────────────────────────────────
Candle materials (847 x $9) $7,623.00
Gift set materials (45 x $28) $1,260.00
Shipping supplies $1,240.00
───────────────────────────────────────────────────
TOTAL COGS $10,123.00
═══════════════════════════════════════════════════
GROSS PROFIT $20,491.00
GROSS MARGIN 66.9%
═══════════════════════════════════════════════════
OPERATING EXPENSES
───────────────────────────────────────────────────
Marketing & Advertising $2,100.00
- Instagram ads
Software & Tools $237.00
- Shopify ($79 x 3 months)
Contractor & Freelancer $1,250.00
- Photographer $800.00
- Packaging designer $450.00
Office & Operations $135.00
- PO Box ($45 x 3 months)
Insurance $125.00
- Product liability (quarterly)
Travel & Events $630.00
- Craft fair booth $350.00
- Travel $280.00
───────────────────────────────────────────────────
TOTAL OPERATING EXPENSES $4,477.00
═══════════════════════════════════════════════════
NET PROFIT $16,014.00
NET MARGIN 52.3%
═══════════════════════════════════════════════════
Analysis:
- Top 3 expenses (excluding COGS): Marketing ($2,100), Contractors ($1,250), Travel/Events ($630)
- Gross margin: 66.9% — Strong for physical products (benchmark: 30%+). Gift sets have lower margin (64%) vs. candles (72%) due to higher COGS ratio.
- Net margin: 52.3% — Excellent. Well above the 20% target.
- Q4 vs. typical quarter: Holiday season likely inflated revenue. Track Q1 to establish a non-seasonal baseline.
- Recommendation: Gift sets generated $3,510 on 45 units. Test increasing gift set promotion — the AOV ($78) is 2.4x a single candle ($32), and despite the lower margin percentage, profit per gift set ($50) is higher than profit per candle ($23).
Recovery and Fallback
- If the user cannot provide exact numbers, help them estimate from bank statements or payment processor dashboards (Stripe Dashboard > Payments > Export)
- If categories are unclear, ask the user for the three largest expenses and their purpose — this usually reveals the right categorization
- If the user has mixed personal and business transactions, flag this and only include clearly business-related items — recommend they open a separate business bank account
- If prior period data is unavailable for comparison, note this in the report and recommend starting monthly tracking going forward
Constraints
- Always include the financial disclaimer — this is not a substitute for professional accounting
- Do not estimate tax liability — recommend consulting a CPA for tax calculations
- Do not include owner draws/salary in operating expenses unless the user explicitly requests it (this is an accounting choice)
- If transactions are a mix of personal and business, ask the user to separate them — do not categorize personal expenses as business
- Round all amounts to two decimal places
- Use accrual basis by default (revenue when earned, expenses when incurred), but switch to cash basis if the user specifies
- Do not provide investment advice based on P&L results