Aug 082011
A lot of people have the question: What is the Difference Between Gross Income and Net Income? There are two separate answers to this question—one for businesses and one for employees.
For Businesses
For a business, gross income (also known as gross profit) is simply revenues minus cost of goods sold. You can see gross profit on the income statement above. Net income for a business is revenues minus cost of goods sold minus all other business expenses.
The difference between the two is quite clear for a business.
For Employees
For individuals, gross income is a person’s total income before any deductions (like taxes) are taken into account. Net income is a person’s total income minus any taxes or other deductions.
