What is net profit?

Net profit (definition)

Net profit is the money you get to keep after all expenses and taxes are paid.

Net profit is often called the bottom line because it appears as the last line of your profit and loss statement after all expenses have been taken out.

The formula for net profit shows that gross profit minus operating expenses and taxes equals net profit.

Net profit is what the business gets to keep, which makes it one of the most important numbers people look at

Also called net earnings and net income, net profit can be distributed to business owners or reinvested into the business.

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Disclaimer: This glossary is for small business owners. The definitions are written with their requirements in mind. More detailed definitions can be found in accounting textbooks or from an accounting professional. Xero does not provide accounting, tax, business or legal advice.