Period of Time on Statement of Income

The period of time on statement of income depends on the purpose of your income statement. The period of time on statement of income can be anything from one month or less, to a few months, to a quarter, or a year depending on why you are doing the income statement. Generally, most income statement are done annually. However, if the IRS or tax agencies require you to file your financial statements more often, you may want to do your statement of income on a more regular basis such as every 3 months (quarterly basis) or every 6 months.

If you are applying for a loan or business loan and the loan company wants to see your business plan and financial statement, you may need to comply with their requirements and the period of time on statement of income according to their requirements.

Period of time on Income statement vs balance sheet

Unlike the balance sheet, the income statement or profit and loss statement shows how profitable your business is in the period of time on the statement of income. The income statement does not take into account how profitable your business is outside the period of time on that income statement.

So for example, if the period of time on your income statement is January, then if you make a loss in January but made tons of profit in December, then your income statement for January will still look gloomy and showing that you made a loss.

Even out the profits with longer period of time on statement of income

If your business has fluctuating revenues months to months, it is useful to do an income statement for a longer period of time. The length of period of time on your income statement will even out the sales fluctuations, making your business look more reasonable.