Home Decor Profit and Loss Template: Line by Line

The lines every month should have

Each month in a home decor profit and loss template should use the same sequence: sales, cost of goods sold, gross profit, operating expenses and net profit. Keep GST/HST collected out of sales revenue; it is collected for the tax authority, not earned by the store. For Canadian reporting, the applicable rate depends on the province, as listed by the Canada Revenue Agency.

Keep balance-sheet accounts and cash movements outside the statement. Bank balance, inventory on hand, accounts payable, loan principal, owner withdrawals, sales-tax remittances and Shopify payouts do not belong as P&L lines. A payment can affect cash without being an expense, and an expense can appear before or after its cash payment.

How to fill in each line

For sales, use Shopify’s order and transaction reports, then remove cancelled orders, refunds and discounts from gross sales. Record revenue when the order is delivered under your chosen accrual policy, not when a customer places it or cash reaches the bank. Keep GST/HST collected out of revenue: the Canada Revenue Agency lists 5% GST in Alberta, British Columbia, Manitoba, Quebec, Saskatchewan and the territories; 13% HST in Ontario; 14% HST in Nova Scotia from April 1, 2025; and 15% HST in New Brunswick, Newfoundland and Labrador and Prince Edward Island (Source: Canada Revenue Agency).

For COGS, match each delivered unit to supplier invoices, inventory receipts and your product-cost model. Include landed costs consistently, and reverse the cost when a product is returned to sellable inventory. Gross profit is sales less COGS. Use payment-processor statements for processing fees, Shopify records for platform fees, carrier invoices for shipping and returns, ad-platform invoices for advertising, and payroll records for wages and employer costs. Classify fulfilment and shipping consistently as COGS or operating expenses. Reconcile each expense to bookkeeping entries, accrue invoices for the month they relate to, and place refunds, chargebacks and discounts in the period affecting the original sale.

A filled-in monthly statement

Use one completed month as a check that every subtotal flows into the next line. This sample statement is in CAD and excludes GST/HST collected from customers, since sales tax collected is not store revenue.

The statement separates gross profit from operating profit, then shows the below-the-line interest expense needed to reach net profit. Each subtotal is traceable from the rows beneath it.

How to read the result

Revenue answers: how much did the store earn from eligible sales during the month? Use it to assess demand, channel performance and growth. Investigate a sudden drop, an unusually large jump, or a gap between order activity and recorded revenue. Check cancellations, refunds, discounts and delivery timing before treating the change as a trading result.

Gross profit answers: what remains after the products sold are assigned their cost? Read it alongside the gross margin. A falling gross profit despite stable revenue warrants investigation of supplier costs, product mix, discounts, freight treatment or pricing. For home decor, compare products and collections as well as the store total; a small number of low-margin items can obscure the cause. A profit margin calculator can check the arithmetic.

Operating profit answers: what remains after the costs required to run the store, such as marketing, payroll, software and occupancy? It is the result to investigate when gross profit is sound but the business is not covering its operating structure. Net profit answers what remains after all expenses included in the statement. In the separately added worked example, read downward: revenue minus cost of goods gives gross profit; subtract operating expenses to reach operating profit; then account for the remaining expenses to reach net profit. Investigate negative net profit, a shrinking margin, or a result that changes sharply month to month.

Where a P&L differs from cash flow

A profit and loss statement measures profitability for the period; a cash-flow report measures money that actually entered or left the bank. They can disagree without either being wrong. Use the P&L to judge pricing, gross margin, operating costs and whether the store earned a profit. Use cash flow to decide whether you can pay suppliers, payroll, taxes and loan obligations on time.

For illustration only, buying $8,000 of home decor inventory is a cash outflow when paid, but it is generally recorded as inventory first and becomes cost of goods sold as those items sell. A Shopify processor may deposit sales several days later, net of its fees: the P&L records the eligible sale and processor fee in the relevant period, while cash flow records the deposit when it reaches the bank. An unpaid supplier bill can reduce P&L profit before any cash leaves.

Loan payments require the same separation: interest is an expense on the P&L; principal repayment reduces the loan balance and appears in cash flow, not as an operating expense. Review both reports before increasing ad spend, placing a large stock order or taking on debt.

Common bookkeeping gaps in home decor

Home decor bookkeeping often misses costs that sit outside the product invoice. Landed cost should capture the purchase price plus applicable freight, duties and brokerage, with shared freight allocated consistently across products or shipments. Otherwise, a bulky lamp and a small cushion can appear to have the same economics when they do not. Marketplace commissions, payment fees and fulfilment charges should remain identifiable operating or selling expenses rather than disappearing into a generic bank-fee line.

Damaged goods need a documented write-down or inventory adjustment; returned goods need a consistent decision on whether they are sellable, discounted or unsellable. Owner withdrawals are equity transactions, not business expenses. Sales tax collected from customers is generally tracked separately from revenue and tax expense; confirm the treatment and filing obligations for your province with a Canadian tax professional. Finally, set a month-end cutoff: decide whether orders, refunds, supplier bills and freight belong to the order, shipment or invoice period, then apply that rule every month. A cash-book view and an accrual P&L can therefore differ without either being incorrect.

A useful home decor P&L gives every month the same structure and a clear source for each figure. Use it to assess profitability, use cash flow to assess liquidity, and investigate differences before changing prices, purchasing inventory, or cutting expenses.