What is turnover?

Published Wednesday 17 June 2026

Table of contents

• Turnover definition
• Turnover vs profit
• How to calculate turnover
• What is annual turnover?
• Does turnover include GST?
• Why turnover matters for your business
• How to increase your business turnover
• Reporting turnover
• Other types of turnover in business
• Track your turnover with Xero
• FAQs on turnover

Key takeaways

• Turnover is the total revenue your business earns from selling goods or services over a set period, before any costs are deducted.
• Turnover and profit are different; turnover is your total sales income, while profit is what remains after you subtract expenses.
• In Australia, turnover is calculated excluding GST, and you'll need to register for GST once your turnover reaches $75,000.
• Tracking turnover helps you meet tax obligations, benchmark performance, set profit targets and understand your business's value.

Turnover definition

Turnover is the total revenue a business earns from selling goods or services over a specific period. You can calculate it by multiplying the number of sales by the price per sale.

For example, if you sell 500 units at $20 each, your turnover is $10,000. It's sometimes called gross revenue or total sales, and it sits at the top line of your profit and loss statement.

Turnover only includes income from your core business activities. It doesn't include interest earned on savings, money from selling business assets, or funds received from investors. Your accounts classify these separately because they don't reflect your day-to-day trading performance.

Turnover vs profit

Turnover is your total sales income, while profit is what's left after you subtract costs. They're related but measure very different things about your business health.

A business can have high turnover and still make a loss if expenses outweigh income. That's why it's essential to track both figures.

Here's a worked example to show the difference:

• Turnover (total sales): $100,000
• Cost of goods sold (COGS): $60,000
• Gross profit (turnover minus COGS): $40,000
• Operating expenses (rent, wages, utilities): $25,000
• Net profit (gross profit minus expenses): $15,000

In this example, your turnover is $100,000, but your net profit is only $15,000. Knowing both numbers helps you spot whether low profits come from weak sales or high costs.

How to calculate turnover

To calculate turnover, add up all the income your business has earned from sales during a specific period. The basic formula is:

Turnover = number of units sold x average price per unit

Turnover calculation example

Suppose you run a candle business and sell 1,200 candles at $25 each during a quarter. Your turnover for that quarter is:

1,200 x $25 = $30,000

If you sell multiple products, calculate the turnover for each product line and add them together. For example:

• Standard candles: 1,200 x $25 = $30,000
• Gift sets: 300 x $55 = $16,500
• Accessories: 800 x $10 = $8,000

Your total quarterly turnover across all product lines is $54,500.

What is annual turnover?

Annual turnover is the total revenue your business generates over a full financial year. In Australia, the financial year runs from 1 July to 30 June.

Tracking annual turnover gives you a clear picture of your business's size and growth trajectory. You can compare it year on year to see whether sales are trending up, down, or staying flat.

Annual turnover is also the figure the Australian Taxation Office (ATO) uses to determine your tax obligations, including whether you need to register for GST and which tax concessions you're eligible for.

Does turnover include GST?

In Australia, you generally calculate turnover excluding GST. When you report your turnover for tax purposes, you use the GST-exclusive amount.

This matters most when you're approaching the GST registration threshold. If your annual turnover reaches $75,000 (or $150,000 for not-for-profit organisations), you must register for GST with the ATO.

Once registered, you'll charge GST on your sales and can claim GST credits on your business purchases. Your Business Activity Statement (BAS) will require you to report GST-exclusive turnover figures each quarter or month, depending on your reporting cycle.

Why turnover matters for your business

Turnover is one of the most important numbers in your business because it drives almost every financial decision you make.

• Tax obligations: your turnover determines whether you need to register for GST, which tax concessions apply, and what you report on your BAS
• Performance benchmarking: comparing your turnover against previous periods or industry averages shows whether your business is growing, stalling, or declining
• Setting profit targets: once you know your turnover, you can work backwards to set realistic profit goals by managing your cost of goods sold and operating expenses
• Business valuation: buyers and lenders typically use turnover as a starting point when valuing your business

How to increase your business turnover

Growing your turnover means generating more sales revenue. There are several practical ways to do this without necessarily spending more.

• Review your pricing: small price increases can boost turnover significantly, especially if your costs have risen since you last set your prices
• Expand your product or service range: adding complementary offerings gives existing customers more reasons to buy from you
• Strengthen your marketing: targeted campaigns, social media and email marketing can help you reach new customers and encourage repeat purchases
• Explore new sales channels: selling online, through marketplaces, or at markets and events can open up additional revenue streams
• Improve customer retention: it's often cheaper to keep existing customers than to find new ones; loyalty programs, follow-up emails and excellent service all help

Reporting turnover

You'll report your turnover on your profit and loss (P&L) statement, where it appears as the top line. The P&L then subtracts your costs and expenses to arrive at your net profit.

In Australia, you'll also report turnover-related figures on your BAS. This includes your total sales for the period and the GST you've collected. Most small businesses lodge a BAS quarterly, but some lodge monthly.

Using accounting software that connects to your bank accounts makes this process much simpler. Transactions flow in automatically, so your turnover figure stays up to date without manual data entry.

Other types of turnover in business

The word "turnover" isn't only used for sales revenue. In business and finance, it also describes how quickly certain assets or resources cycle through your operations.

Inventory turnover measures how many times you sell and replace your stock during a period. The formula is:

Inventory turnover = cost of goods sold / average inventory value

A higher number means you're selling stock quickly, which is generally a sign of healthy demand. A lower number could mean you're overstocking or that certain products aren't selling well.

Accounts receivable turnover shows how efficiently you're collecting payments from customers. The formula is:

Accounts receivable turnover = net credit sales / average accounts receivable

A higher ratio means you're collecting payments faster, which keeps your cash flow healthy.

Employee turnover tracks how often staff leave your business over a period. The formula is:

Employee turnover rate = (number of departures / average number of employees) x 100

High employee turnover can signal workplace issues and increases your recruitment and training costs.

Track your turnover with Xero

Keeping on top of your turnover doesn't have to mean hours of spreadsheet work. With Xero's accounting software, your bank transactions flow in automatically, your reports update in real time, and you can see exactly where your business stands at any moment. Get one month free.

FAQs on turnover

Here are some common questions small business owners ask about turnover.

Is turnover the same as profit?

No, they measure different things. Confusing the two is one of the most common small business accounting mistakes, which is why lenders and the ATO look at both figures separately.

What is a good turnover for a small business?

There's no single benchmark because it varies by industry, location and business model. What matters more is whether your turnover is growing over time and generating enough profit to sustain your business.

Does the $75,000 GST threshold apply to projected turnover?

Yes, the ATO uses your projected annual turnover, not just your historical figures. If you land a large contract that pushes your expected turnover past $75,000, you must register for GST even before you've actually earned that amount.

What's the difference between turnover and revenue?

In Australia, turnover and revenue mean the same thing: your total income from sales. The terms are interchangeable, though "turnover" is more common in Australia and the UK while "revenue" is preferred in the US.

How often should you calculate turnover?

Most businesses track turnover monthly or quarterly to stay on top of cash flow and tax reporting. Reviewing it at least every quarter helps you spot trends early and make timely decisions.