What this report shows
The Profit and Loss is your income statement: what the business earned, what it cost to earn it, and what is left. It is laid out the way an accountant reads one — revenue, cost of sales, gross profit, operating expenses, operating profit, finance costs, and then the headline, Profit before tax. Below that it shows any of the business's own tax you paid on account and the profit after that.
Every line is one of your SARS categories, grouped under its heading — Employee costs, Premises, Motor vehicle and so on — so the report reads the same way your annual return does. It pulls together your invoices, supplier invoices, credit notes, the cash you logged in and out, and your asset register. You do not enter anything here.
- Every figure is without VAT. VAT is SARS's money passing through, never income or a cost.
- It counts invoices from the day you issue them and bills from the day they are issued, not when the cash moves. That is the accrual basis, and it is the only basis this report uses.
- It is always the whole business. To look at one bank account, use Cash Flow or Banking Reports — a Profit and Loss is a statement of the business, not of an account.
Open the report and pick a period
- Open Profit and Loss, under the "Financials" tools card (or the "Financials" group on desktop).
- Choose This month, This year or Tax year. It opens on This month. Tax year shows the year's dates and has arrows to step back to an earlier year — that is the window your annual return starts from.
- Read the big Profit before tax figure at the top. It shows in blue when you are in profit and red when you are not, with your margin — how much of your revenue is left — underneath.
Reading the statement
- Revenue: what you earned, under Trading income, Other income and, if any, Grants & funding. Money you received that is not revenue — a loan, your own capital, a dividend, what a business asset sold for — is kept out and named in a note below.
- Cost of sales and Gross profit: materials, stock and subcontract labour come off first, and what is left is your gross profit with its margin.
- Operating expenses: every other heading, each with its lines. Small assets written off in full sit under Assets; anything over R7 000 that is not in your asset register yet is flagged there. Depreciation is the register's write-off for the period and says how many assets it comes from.
- Operating profit, then Finance costs (interest on borrowings), then Profit before tax — the headline.
- Tax paid on account: your own income tax, provisional tax or Turnover Tax paid in the period, and the profit after it. This is the one cost that comes off the tax bill rather than off the profit, which is why it sits below the line.
An amber Uncategorised heading means money with no SARS category set. It is never dropped — the totals still add up — but it is filed under nothing. Open each entry and set its category; on a bill or invoice, set it on the line.
Money that moved but is not in the statement
A blue note under the statement lists money that left or arrived without being a cost or revenue: VAT and PAYE paid over to SARS (SARS's money passing through — PAYE is already inside your wage cost, so if you log net wages by hand, log the PAYE under Employee costs rather than as a payment to SARS), loans and capital you received, and your mileage deduction, which is SARS's deemed rate from your travel log and is claimed on the return rather than paid out.
Why your tax figure is different
Profit before tax is what the business made. What SARS taxes is worked out from it: the annual return adds back costs the Act does not allow, takes back allowances on anything you sold, and sets off any loss carried forward. Set this report to the tax year and the profit here is the figure that return starts from.