Gross versus Net Income

 

In business, where gross refers to the total income, net refers to income after all expenses, overheads, taxes, and interest payments are deducted. The difference in value between these two amounts can be significant.

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As the head of your business, it is important for you to know:

  • The difference between your gross and net income;

  • How gross and net express themselves in the context of your business; and

  • That your accountant emphasizes profit and net worth over gross figures and helps you to track and measure both constantly.

 Seldom do business owners spend time analyzing, and re-analyzing, what parts of their business—what services, what clients, what facilities—are the most net profitable. Business owners often allow low-profit considerations to consume the same resources as high profit ones, paying exorbitant amounts of money for unnecessarily large offices, an excessive number of staff, and other features used to impress people without profitable purpose.

 For the health of your business, it is incumbent upon you—and your accounting team—to consider your expenses and ask yourself: How much does this contribute to net? Because without net viability, all other perceived benefits are unsubstantial.

 Stonehenge Accounting can help your business maximize its profit by tracking and measuring your profit and net worth.

If there is something we can help you with click below to schedule your Complimentary Strategy Session Today!