QuickBooks Profit and Loss Report

Cash or accrual: the same Stripe sale in two months

Intuit defines the two methods by when income counts. On a cash basis, the report "counts income or expenses only once you get a payment or pay a bill." On an accrual basis, you "record income and expenses when you send the invoice or receive the bill," and the report "includes income and expenses even if the money hasn’t changed hands yet."

For a business billing through Stripe, the gap shows up at every month end. Say a Stripe invoice for $2,000 is finalized and sent on March 28 and the customer pays it on April 3. An accrual-basis P&L puts the $2,000 in March. A cash-basis P&L puts it in April. Neither is wrong. They answer different questions, and a March P&L that looks $2,000 light usually has the basis set differently from the report it is being compared to.

Card sales paid at checkout behave differently. When the sale and the payment are the same event, as on a sales receipt, the income lands on the same date under either method. So the basis setting mostly matters for invoices, and for a business with both, it changes the invoice income and leaves the checkout income where it was.

The company default lives in the Accounting section of your settings, and Intuit notes that the IRS "requires you to use the same accounting method from year to year," with approval needed to change it. To compare without changing anything, change the Accounting method on the report itself, or open Customize and change it in the General section.

Why the P&L and Balance Sheet show different net income

The Balance Sheet carries a Net Income line in its equity section, and Intuit says it "should match the net income on the Profit & Loss report for current fiscal year." When the two disagree, Intuit names three usual causes: "The dates or bases of the reports do not match or the filters are set incorrectly," or "The Fiscal Year preference is not set properly."

The first cause is by far the most common. A Balance Sheet run as of March 31 shows net income from the start of the fiscal year to March 31. A P&L run for March alone shows one month. Match the period to the fiscal year to date, match the basis, and clear any filters before you look for anything else.

If both reports use the same parameters and still disagree, Intuit’s next step is to check the fiscal year setting, then run both reports for all dates. Prior years’ net income is not lost when the fiscal year turns over. It moves into Retained Earnings, which is why the Balance Sheet line only ever covers the current year.

Reading Stripe activity on the P&L

Everything a Stripe business earns and spends through Stripe should reach the P&L as income or expense lines: gross sales in an income account, Stripe fees in an expense account, refunds against income, and dispute losses in whatever account you use for chargebacks. The Stripe balance itself, and the payouts that move money from it to your bank, belong on the Balance Sheet.

That split is the most useful check you can run. A payout is a transfer between two accounts you own, so it should never show up as income. If a month’s P&L shows income roughly equal to sales plus payouts, the payouts are being counted a second time, usually because a bank deposit was categorized as income instead of matched to the Stripe holding account.

For a month-end tie-out, compare the P&L against Stripe’s Balance summary report, which Stripe says "works like a bank statement." Its balance change from activity section groups the period’s transactions by reporting category, such as charges, refunds and disputes, with gross, fee and net totals for each. Its payouts section is the part that should have no P&L counterpart. Differences that remain usually come from basis (invoices counted when sent rather than paid), from timing (Stripe can date the report in UTC or a timezone you choose, so activity near midnight on the last day can fall in a different month), or from currency, since Stripe reports in your settlement currency.

Comparing periods to spot problems

A single month’s P&L rarely shows a sync problem on its own. A comparison usually does. Intuit’s Compare another period option puts periods side by side: the previous period, the same period last year, or the year to date, with the difference shown as a dollar amount or a percentage.

For a Stripe business, run the last three months side by side and read the fee line against the sales line. Stripe’s standard card fee is a fairly steady share of card sales, so a month where fees jump while sales don’t, or where fees drop to zero, points at something to check: fees posted to a different account, fees booked in a later month, or a batch of transactions that never synced. Refund and chargeback lines are worth the same glance, because a spike there is sometimes a real business problem and sometimes a duplicate.