What’s the difference between profit and cashflow, and why does it matter?
September 11, 2025
Profit is the amount left after subtracting your expenses from revenue. Cash flow, on the other hand, is the actual movement of money in and out of your bank account. A business can show a profit on paper but run into trouble if customers are slow to pay or if expenses come due before income arrives. Many businesses fail not because they weren’t profitable, but because they didn’t manage cash flow. Regularly monitoring both gives you a full picture: profit tells you if your model is working, and cash flow tells you if you can keep the doors open tomorrow.
Explore Questions
What’s the difference between profit and cashflow, and why does it matter?
What is an operating agreement for an LLC, and do I need one in Washington State?
How do I create a basic marketing plan?
What is the Washington Annual Business License Renewal, and does it affect my taxes?
Do I need to collect sales tax for online sales in Washington State?
Can I Transfer My LLC or Corporation From One State to Another? How Domestication Works
What are the tax implications of using digital payment platforms for my small business?
What types of service businesses are subject to sales tax in Washington State?
What insurance policies are essential for small businesses?
How do I legally protect my business idea?
When does the IRS consider my hobby a business for tax purposes?
How do I build a sales funnel?
Do I need a Registered Agent?
What are the essential financial records I need to keep for my business?
I'm just starting out, how do I build a customer base?
I have an LLC. How do I file my taxes with the IRS each year?
What is the Beneficial Ownership Report and does my business have to do it?
I need to hire my first employee. What do I do?
How do I know if I should do my own accounting or hire an accountant to do it for my business?
In what business situations should I consult an attorney?
What types of business insurance do I need for my business?
What is included in Washington State Excise Tax?
How can I find out if a physical location I am interested in has the right zoning for my type of business?
Can an LLC have investors or shareholders?
Do I need a resellers permit?
How can I ensure that an independent contract I have hired won't be classified as an employee of my business?
How do I understand permitting requirements if I am opening a physical store location?
How much should I charge for my products and/or services?
When should I update my business plan?
How do I know if I need a food cottage permit or if I have to prepare food I am selling for my business in a certified commercial kitchen?
Should I elect to have my LLC taxed as an S Corp?
.png)