Profit and loss statement for self-employed sole traders: what to include, a worked example and who asks for one

Short answer: a profit and loss statement for a self-employed person lists, for a stated period, your business income (excluding GST or VAT if you are registered), the costs of earning it, and the net profit left over. That net profit, not your sales, is what a landlord, lender, Centrelink or Work and Income treats as your income. Your own drawings, your personal income tax and your own super or pension contributions do not go on it. Put your name, business name, ABN or UTR, and the exact dates it covers at the top, and sign and date it. If your books are in Xero, its Profit and Loss report for the period is the statement; a worked example for a sole trader hairdresser is below.

Who asks for one, and what they usually want

A profit and loss statement you prepare yourself is often the first thing people ask for, but it is rarely the only thing. Requirements change between lenders and agents, so check with the one you are dealing with.

Who is asking	What they usually want	What the P&L is for
A landlord or letting agent	Recent tax return or ATO Notice of Assessment, BAS, a few months of bank statements, or a statement from your accountant	Showing you earn enough for the rent, especially if you started recently and have no return yet
A mortgage lender (Australia)	Usually the last 2 years of tax returns and Notices of Assessment; “low doc” lenders may accept BAS and an accountant’s declaration instead	A year-to-date figure when the last return is old
A mortgage lender (UK)	Usually 2 or 3 years of SA302 tax calculations with matching Tax Year Overviews, or accounts certified by a qualified accountant	A year-to-date figure, or a first year’s accounts for a newer business
Centrelink (Australia)	A profit and loss statement for about 3 months, on the SU580 form or from your accountant, until a tax return covers 12 months of trading	Working out your fortnightly income: see the Centrelink profit and loss statement guide, or the Centrelink profit and loss calculator
Work and Income (New Zealand)	Either an IR3 tax return or a profit and loss account, plus either an IR3B schedule of business income or an IR10 financial statements summary; then you declare what you earn each week, in the week you earn it rather than when you are paid	Showing your business income for a benefit. The expenses Work and Income lets you deduct can differ from the ones allowed for tax, so ask your case manager which of your costs count
The tax office	Your tax return: the business schedule in Australia, the self-employment pages of Self Assessment in the UK, the IR3 in New Zealand	The figures you copy across, after the tax adjustments

The common thread: they all read net profit, and the more official the source behind it (a lodged return, an accountant’s signature, bank statements that match), the more weight it carries.

What goes on it

1. A heading. Your name, trading name, ABN (Australia), UTR (UK) or IRD number (New Zealand), “Profit and loss statement” and the period, for example “1 July 2025 to 30 June 2026”.
2. Income. Everything the business earned in the period: fees, sales, tips you put through the business. If you are registered for GST or VAT, leave the tax out; it is not yours. Not registered yet in the UK? The VAT threshold calculator shows how close your last 12 months are to £90,000.
3. Cost of sales (if you have any). Materials, stock and subcontractors that go straight into what you sell. Sales less these is your gross profit.
4. Expenses. The running costs of the business: rent, vehicle, phone, insurance, software, advertising, accountant, bank fees, depreciation on equipment.
5. Net profit. Income less every cost above. This is the line people read.
6. A signature and date, with a line such as “prepared from my business records”. If an accountant prepared or reviewed it, their name and signature go here instead.

Three things stay off it, because they are not costs of the business: drawings (money you move to your personal account), your personal income tax and National Insurance, and your own super or pension contributions (in Australia and the UK these are dealt with in your personal tax return, not as a business expense).

Worked example: a mobile hairdresser in Adelaide

These figures are made up. Jess is a sole trader hairdresser, registered for GST, who rents a chair two days a week and does home visits the rest. She is applying for a rental and the agent asks for proof of income. This is her Xero Profit and Loss for the financial year, all figures excluding GST.

Jess Taylor, trading as Jess Taylor Hair. ABN 00 000 000 000 (example). Profit and loss statement, 1 July 2025 to 30 June 2026.

	$
Hairdressing services	96,400
Product sales	6,800
Total income	103,200
Colour and salon products used	9,700
Products bought for resale	3,900
Gross profit	89,600
Chair rent	15,600
Motor vehicle	6,200
Advertising	1,800
Depreciation (equipment)	1,500
Accountant	1,250
Bank and card fees	1,180
Insurance	1,450
Phone and internet	1,140
Booking software	960
Training	850
Total expenses	31,930
Net profit	57,670

Prepared from my business records in Xero. Signed, Jess Taylor, 14 July 2026.

What the agent reads from it:

• Her income is $57,670 a year, not $103,200. That is about $4,806 a month or $1,109 a week before personal tax. Agents often use a rule of thumb of rent at no more than about 30% of income: 30% of $57,670 is about $333 a week. Quoting sales instead of profit would have suggested she could afford almost twice that, which is why agents and lenders look for the profit line.
• The $52,000 she moved to her personal account during the year is not on it. Those were drawings. If she had listed them as wages, her profit would have shown $5,670 and she would have looked unable to pay rent at all.
• Depreciation is a cost, but not cash out this year. Some lenders add it back when they assess what you can repay, which would make her figure $59,170. Do not add it back yourself on the statement; leave that to them.

To make the statement stronger, Jess attaches her last Notice of Assessment and three months of business bank statements, whose deposits match the income in Xero.

Making it in Xero

1. Go to Reporting (Accounting > Reports in Xero’s older menu) and open Profit and Loss (menu names move a little between Xero versions and regions).
2. Set the dates to the period you were asked for: a full financial or tax year, a quarter, or year to date. Say which on the statement. For year to date, start on the first day of your financial year, end on the last whole month and show the same months last year beside it; year to date profit and loss statement explains why, with a worked example.
3. Check the basis. Xero runs reports on an accrual basis by default, so an invoice counts when you raise it, not when you are paid. Most sole traders can use either, but be consistent and say which one. Cash vs accrual in Xero shows how far apart the two can be.
4. Look for anything personal: private use of the car or phone, groceries paid from the business card, a “wages” line that is really your drawings. Fix the coding before you export.
5. Export to PDF, add your heading and signature, and keep a copy of the exact report you sent.

Before you send it, make sure the bank accounts are reconciled to the statement date. An unreconciled account can double-count income; why your Xero bank balance does not match shows how to find the gap. If you do not use Xero, the free profit and loss sheet lays the same statement out as you type.

Common mistakes

• Putting sales where profit should be. Income is the top line; the reader wants the bottom one.
• Listing drawings or your own wage as an expense. It shrinks your profit on paper and makes you look less able to pay, not more.
• Including GST or VAT in income when you are registered. It inflates income by up to 10% in Australia, 15% in New Zealand and 20% in the UK.
• A part year that does not say so. Seven months of trading presented as “the year” will not match your bank statements or your next tax return.
• A figure that disagrees with your tax return. Your return can differ (tax adjustments, depreciation rules), but if a lender sees a much higher profit on your own statement than on your return, expect questions. Trading profit explains how a UK sole trader’s taxable profit is worked out from net profit.

For a fuller example layout, including a company’s P&L line by line, see the profit and loss statement example. If the year shows a loss, whether you can set it against wages or other income depends on the country (in Australia, the non-commercial loss rules); net operating loss sets out the rules for sole traders.

Common questions

Can I do my own profit and loss statement if I am self-employed? Yes. Anyone can prepare one from their records, and many landlords and some lenders accept it, especially alongside bank statements and your last tax assessment. Lenders assessing a mortgage usually want tax returns or accountant-certified accounts as well.

What should a self-employed profit and loss statement include? Your name and business details, the period it covers, income (excluding GST or VAT if registered), cost of sales, expenses, net profit, and your signature and date. Drawings, your personal tax and your own super or pension contributions stay off it.

Is net profit my income when I am self-employed? Yes. For a sole trader, net profit is the income that landlords, lenders, Centrelink, Work and Income and the tax office look at, although the tax office and the benefit agencies then make their own adjustments. Sales are not income in this sense, and neither are the drawings you take.

How far back should a profit and loss statement go? As far as the person asking wants: often the last full financial or tax year plus year to date. Centrelink asks for about 3 months at a time, and Work and Income in New Zealand takes a P&L in place of an IR3 return, then weekly declarations. UK and Australian mortgage lenders usually want 2 years of tax returns as well.

Does an accountant need to sign it? Not always. Rental agents often accept one you sign yourself. Mortgage lenders, especially in the UK, often want accounts certified by a qualified accountant or your HMRC tax calculations instead.

Can I print a profit and loss statement from Xero? Yes. Run the Profit and Loss report for the dates you need, check the basis and the coding, and export it to PDF. Add your name, business details and a signature before you send it.

Know your profit before anyone asks

ReportPilot reads your Xero figures and sends a short plain-English email every Monday: how sales, gross margin and profit compare with last month and the same month last year, the cash in the bank, and money owed to you that is past due. So when an agent or lender asks what you earn, you already know. It asks Xero for read-only access, and there is a 14-day free trial with no card.