How Do I Know If I’m Making Money Each Month?

You know if you’re making money each month by comparing how much income you received against how much you spent during that period. For micro and one-person businesses, this does not require profit and loss reports built for accountants.

At its simplest, monthly profitability comes down to:

• total income received

• total business expenses paid

• the difference between the two

If income is higher than expenses, the business is making money at a basic level. If not, it’s a signal to review pricing, costs or invoicing habits.

Why Many Micro Businesses Are Unsure

Many business owners feel unsure because they rely on bank balances rather than actual figures. A healthy bank balance does not always mean the business is profitable, especially if invoices are unpaid or expenses are delayed.

This uncertainty often comes from:

• mixing business and personal spending

• not reviewing totals regularly

• relying on memory instead of records

• confusing cashflow with profit

Without clear summaries, it’s easy to feel busy but not know whether the business is actually moving forward.

A Simple Monthly Check That Works

A practical monthly check looks like this:

• review total income for the month

• review total expenses for the month

• compare the two figures

• note any large changes from previous months

This takes only minutes but provides valuable insight into how the business is performing.

Common Question

Do I need financial statements to know if I’m profitable?
No. Micro businesses only need clear income and expense totals to understand whether they are making money month to month.

When This Approach Is Enough

For most one-person businesses, this method is sufficient for:

• understanding business viability

• making pricing decisions

• controlling costs

• planning ahead

You don’t need complex reports. You need clear numbers reviewed regularly.

Learn more at www.ecashbooks.com — simple bookkeeping for micro and one-person businesses.