Understanding the Profit & Loss Statement

What is a P&L?

A Profit & Loss Statement or P&L summarizes the revenues and expenses incurred during a specific time period. This report helps you understand the main profit drivers for your rental business. 

How do I generate a P&L in Azibo?

Azibo enables rental property owners to automatically generate a complete, up-to-date P&L for individual properties, portfolios, or all properties over a specific time period. Simply follow these steps: 

1. Import all rental business transactions automatically by linking the relevant bank or credit card accounts. Transactions can also be manually recorded in the same tool.
2. Use our bookkeeping tool to assign each transaction to a property and category from our Chart of Accounts. Watch the demo below for an overview.
3. Go to Reports and click P&L Statement. 
4. Select the properties and the time period for the report to see the live results. 

Is the Azibo P&L on a cash or accrual basis?

The P&L will reflect the dates you enter for your transactions and journal entries.  If you are booking expenses and income based on when the cash is paid or received, the P&L will reflect that. If you are booking expenses and income based on when the expense is occurred or income earned, regardless of when the cash is paid or received, then the P&L will reflect that.

That being said, Azibo Accounting is built under the assumption that accounting is being done on a cash basis (as is fairly common in real estate accounting). This assumption is reflected in the importation of bank account and credit card transactions, and using those statement dates as the date of the transaction for accounting purposes.

How is Azibo’s P&L different from Schedule E?

Azibo’s P&L Statement is designed to help property owners understand the full profitability of their business, with a structure and level of detail that isn’t reflected in the Schedule E. That being said, unless you have non-taxable income or expenses (not common), the totals on your P&L should tie out to the totals on your Schedule E for the same period of time and same property.

What is included in Azibo’s Profit & Loss report?

Category	Definition
Income	Total revenue generated from property rentals, including monthly rent payments, late fees, and other income sources like laundry facilities and parking.
Expenses	Costs incurred from managing and maintaining rental properties, including property management fees, repair costs, utility expenses not covered by tenants, and property taxes.
Net Income	The total profit remaining after all expenses, including operating costs, mortgage payments, taxes, and maintenance, have been subtracted from the total income.
Net Operating Income	Income from property operations, calculated by subtracting operating expenses  from the total income generated from properties. This excludes expenses related to loans, depreciation, and amortization, so one can get a clear picture of the operating profitability of the business independent of how it’s financed and independent of depreciating book values of assets.
Pre-Tax Net Income	The income remaining after all operating expenses and interest payments are deducted from the net operating income. Income taxes are not included on the P&L as these usually flow down to the owners of the properties to be reported on their own income tax returns.

See Azibo’s Chart of Accounts to see how you can categorize your income and expenses. 

Would you like to learn more about your Profit & Loss Report and how it applies to your real estate business? Click here to read more.