An income statement, often referred to as the profit and loss statement, keeps track of a company's revenues and expenses. It reveals critical information about the operations and the profitability of a business.

An income statement allows you to...

• Reports a business' performance with the bottom line so you know how your business is doing

• Identify specific expenses that are over or under budgeted expenses so that you can make changes and control expenditures

• Use the financial information to calculate and project cash flows, whether to buy more equipment or expand your business

• Based on the income statement, you can make more informed business decisions for your business

• Determine what your tax liability would be and according you can do tax planning to reduce your tax.