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Income versus expenses, profit versus loss. Let’s look at how money moves through your project.
Income or revenue is what’s coming in. Grants, ticket sales, merch, donations.
Expenses are what’s going out. Artist fees, rentals, printing, gear, marketing, insurance, everything you pay for along the way.
When income is greater than expenses, that’s a profit.
When expenses are greater than income, that’s a loss.
For example, if you earn $5,000 and you spend $6,000, that’s a $1,000 loss. It simply shows that more went out than came in.
A profit means you’ve got surplus resources. A loss means you spent more than you earned, and you need to decide how to cover that gap, whether from savings, future income, or cutting costs.
Income and expenses are the basic building blocks of your financial picture. They show in clear numbers what came in and what went out.
What are income and expenses? What are profit and loss?
Income is money that comes in. Any kind of money that comes in. This could be grants, contracts, artist commissions, ticket sales, merch sales, workshop tuition, or donations, for example.
Expenses are money that exits – i.e., money going out. This could be labor, e.g., employees and contractors, operating expenses like rent and website hosting, and program expenses like costumes and sets.
Your total income and total expenses will either be the same (rare!!) or one will be bigger than the other. If income is bigger than expenses, you’ve got a profit. If income is smaller than expenses, you’ve got a loss.
Keep in mind, you should be looking at the same period of time for income and expenses to get an accurate picture of whether you’re at a profit or loss.
Where do I find my total income and total expenses?
If you’ve kept up with tracking your income and expense transactions (learn how to do this in All About Bookkeeping), you can run a Profit and Loss report that summarizes your income and expenses for a specific time period.
How do I know if I made a profit or came up with a loss?
This is the “bottom line” number, meaning it’s literally at the bottom of your Profit and Loss report. You’ll see it called “net income” or “net revenue” (more about Net Income). If the number in the net revenue line is positive, that’s a profit. If it’s negative, that’s a loss. Take a look at this example profit & loss statement. Did the organization have a profit or loss for January – March 2026?
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