Your profit and loss statement is only as accurate as the data behind it. Several common issues can make your numbers look off, and most of them come down to how transactions are categorized or whether they belong on the P&L at all.

Uncategorized transactions are a frequent culprit. These are the items sitting in limbo without proper expense or income categories. They might show up as “Uncategorized Expense” which inflates your total expenses, or they might not appear on the P&L at all if they’re still sitting in your bank feed waiting to be reviewed. Either way, your totals are incomplete.

Duplicate bank feed entries happen when you manually record a transaction and then the automatic bank feed pulls in the same thing. You end up with the same expense or income recorded twice. This is common with checks that take a few days to clear or with transfers between accounts. Your expenses and revenue both look higher than reality.

Owner transfers showing as income is another common problem. When you move money from your personal account into the business, that’s not revenue. It’s an owner contribution and should hit an equity account, not sales. The same applies to loan proceeds. If a $50,000 loan deposit shows up as income, your revenue is wildly overstated and your business tax preparation will start from incorrect numbers.

Wrong income mapping causes problems when different revenue streams get lumped together or coded to the wrong accounts. If customer refunds aren’t netted against sales properly, your gross revenue looks inflated. If you have multiple service lines but everything goes to one generic sales account, you can’t see which parts of the business are actually profitable.

Missing cost of goods sold distorts your gross profit margin. If you sell products but don’t track COGS, your profit looks much better than it actually is because you’re not subtracting what you paid for the inventory you sold. This is especially common with retail and e-commerce businesses that haven’t set up inventory tracking properly.

Payroll misclassification shows up in several forms. Contractor payments ending up in wages expense, actual wages going to contractor expense, payroll taxes lumped together with gross wages instead of separated, or owner draws coded as payroll. Each of these makes it harder to see what you’re actually spending on labor and whether your staffing costs are sustainable.

The fix for most of these issues is consistent review. Monthly reconciliation catches duplicates before they compound. Full-service bookkeeping keeps uncategorized transactions from piling up. And proper chart of accounts setup prevents most mapping errors from happening in the first place. If your P&L has looked wrong for months or years, the underlying data probably needs cleanup before the reports will be useful.