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vicenteborga
November 26, 2024
Question

Discrepancy between P&L and Taxable Profit

  • November 26, 2024
  • 1 reply
  • 0 views

There is a slight discrepancy between my P&L and my Taxable Profit.


A) Is there an easy way to see why these figures are different?

 

B) For the purposes of calculating my profit for determining contributions to my Solo 401k, which figure should I use? P&L or Taxable Profit?

1 reply

S
SheandL
November 26, 2024

Hi there, Vicente. I'm here to provide you with some details about the discrepancy with your reports. 

 

Firstly, I'd like to clarify what taxable profit report are you compare with Profit and Loss. This way we can provide you with the most accurate approach to guide and resolve the issue you're experiencing. 

 

Moreover, if the taxable report you're referring to is Sales Tax Liability Report, please know that this will display all the total taxable sales coming from your invoices and sales receipt. It is important to note that there may be minor discrepancies between this report and the Profit and Loss Report. This is because the Profit and Loss Report consolidates all transactions linked to income or expense accounts.

 

To easily see the difference between these two reports, please run both report and follow the steps below: 

 

For Sales Tax Liability

 

  1. In your QuickBooks company, go to Report.
  2. From the search field, enter Sales Tax Liability. Once on the report page, you'll see all your tax agency.
  3. Select a tax name, then from the Taxable Amount column, click the amount listed.
  4. You'll be routed to the Transaction Report and please click the Customize button.
  5. Head to Filter, then navigate to Transaction Type dropdown and tick the (Select All) checkbox.
  6. Once done, find the Invoice and Sales receipt option and untick it.
  7. Go to Account and select the appropriate information.
  8. Once done, click Run Report

 

Here's a screenshot of the result:

 

 

For Profit and Loss

 

  1. Navigate to the Reports section.
  2. In the search bar, type Profit and Loss. Upon reaching the report page, you will find a list of your accounts.
  3. From the Total column, click the Total Income amount from your selected account.
  4. This action will direct you to the Transaction Report
  5. Go to the Customize button and proceed to the Filter section.
  6. Locate the Transaction Type dropdown and check the (Select All) option.
  7. After completing this step, locate the Invoice and Sales Receipt options and uncheck them.
  8. Next, go to the Account section and select ensure you've selected the same account when pulling up the Sales Tax Liability.
  9. Finally, click on Run Report.

 

Here's a screenshot of the result:

 

 

Afterward, you can now compare both reports and check the transactions that has caused the discrepancies.

 

As for your second question, I encourage you to contact an accountant. They can offer you an expert guidance about the appropriate account to use in determining your Solo 401k contribution. 

 

I'll include this article you can check if you want to save your report's current customization settings in QuickBooks: Memorize reports in QuickBooks Online.

 

If you need further help and assistance about the discrepancy between these reports, feel free to reply to this post, Vicente. We'll be around to help you. 

V
vicenteborgaAuthor
November 27, 2024

Thanks for your response. I'm referring to the modules on the dashboard. One reads "Profit & Loss", the other reads "Taxable Profit". I don't believe either of these is in reference to sales tax. Please advise.

E
Erika_K
November 27, 2024

On behalf of my colleague, you're most welcome, vicente, thanks for getting back to us. I’d like to contribute to this discussion by providing additional information about Taxable Profit and Profit and Loss (P&L) statements to help clarify any confusion.

 

The Taxable Profit widget shows the amount subject to taxation, calculated from your net profit, taxable income, and estimated deductions for business expenses. In contrast, the Profit and Loss (P&L) statement summarizes business revenue, expenses, and profits or losses over a specific period.

Since these financial data originate from diverse sources, resulting figures will likely vary. Notably, sales tax isn't included in the P&L statement and Taxable Profit. In this case, I recommend generating the Sales Tax Liability report to provide you with a summary of your taxable and non-taxable sales, plus the total sales tax you collected from customers. 

 

For a clearer understanding of your estimated deductions, click the View your deductions link. I'll add an image for visual reference. 


Additionally, I want to ensure you have all the necessary help available. I encourage exploring our new service, QuickBooks Live Expert Assisted. This service provides access to QuickBooks-certified experts who can help you track your profits and determine your Solo 401(k) contributions. By leveraging their guidance, you can streamline your bookkeeping process and gain valuable insights into your financial management.

 

Finally, here are some articles to help you add more details and keep your report settings for future use:

 

You can always count on me if you require additional clarifications or have inquiries about different financial information displayed on your dashboards. Just leave a comment below, and I’ll respond as quickly as possible.

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