Revenue vs Profit | 3 Things You Should Know as a Small Business Owner
Revenue vs Profit
Here are 3 things you should know.
1. Your Revenue is the money your business earns from the products and/or services you sell. You might sometimes see other terminology being used when referring to this number.
Sales Total would refer to sales to customers and clients.
Rental Income is also a form of Revenue earned from Property Owners who collect Rent from residential or commercial tenants. Nowadays people are renting out all sorts of things…Cars…Garage space, etc.
2. Your Profit is the amount of money “left over” after all business expenses have been paid out of the Revenue that was earned. See how that works?
Some people get very confused with these two amounts and mistakenly think that they owe tax on the Revenue “earned” when in acuality, you would owe tax on the “Profit”.
3. The IRS knows your business has overhead (aka expenses) so you are allowed to subtract out these business expenses from the revenue. If you have any money left over, that is your Profit…or…often called your Net Profit.
When you hear that some people don’t owe taxes…this is often because they had a Net “Loss” instead of a Net “Profit”.
As a small business owner, this is yet another reason, why it’s in your best interest to use the services of a Tax Strategist who understands small business and who understands your Industry.
Please be sure to Share this post if you found it of value. And if you want to level up your Tax and Business knowledge visit my YouTube page where you will find loads of content to help you in your business and with your taxes.
As a Tax Strategist, Consultant and Educator, I’ve been helping other Entrepreneurs (and Individuals) around the U.S. just like you, save thousands of their hard-earned tax dollars, increased their refunds, and solve multiple tax problems. Beyond taxes, I am your “GPS” to starting and growing your own business. Be sure to download my ebook Taxes & The New (or “Early-Stage”) Entrepreneur: What You Need to Know