Service related businesses require a different format than the traditional profit and loss statement AKA the income statement. The traditional profit and loss focuses on sales of products and a corresponding cost of goods sold section to help the reader evaluate the gross margin. But in service, the owner needs a profit and loss statement formatted to key in on overall productivity and costs of that productivity.
Profit and Loss Statement for Service Related Businesses
The profit and loss statement for service related businesses focuses on the labor costs in the cost of sales rendered section. In general, labor costs around 60% of net sales. Administrative expenses customarily run 15 to 30% depending on the nature of the service operation.