WHAT IS INCOME: Income is the money an individual or a business receives in exchange for providing a good or service. In a business income could also mean a company’s remaining revenue after all taxes and expenditures have been paid. This could also be referred to as earnings.
Understanding your income as a small business owner helps you understand how profitable your business is. You need to understand the difference between your gross and net incomes respectively as this would help you gauge the financial viability of your income thus identifying the weak points in your finances.
Gross income includes all the income your business earns during the year while net income is your profit after you subtract business expenses and other allowable deductions from your gross income.
To calculate your gross income you must combine the total of all cash ,cheques, credit card charges, rental income ,interests and dividends, damages and lost payments your business received during the year .At this point you are not to deduct any expenses when calculating our gross income.
To calculate your Net income you must deduct business expenses from your gross income. Your expenses may include cost of goods sold, advertising expenses, automobile operation costs office expenses, employee salaries, tax, rental payments .Please take note that if you work from home, you have to deduct the expense for maintaining that space in your house as part of your expenses.
IN PLAIN TERMS: NET INCOME/PROFIT=GROSS INCOME –EXPENSES/EXPENDITURE
CALL TO ACTION…………
Calculating our gross and net income helps you identify your largest expenses well as the most lucrative facet of your business thus allowing you to make improvements and or Diversify.
Using the steps highlighted above calculate your gross and net income from January till date.
After doing that send it to us and we would personally review and determine if you are ready for investors and funding.(This offer is for the first 5 business owners to respond)Tag 3 small business owners who need to prepare their books for investors………………….