What is net income?

Net income is the total amount of profit your business makes after deducting expenses. This includes:

  • the cost of goods sold

  • overhead

  • tax

Net income is a good way of measuring how profitable your business is. Annual net income is your net income for one year.

Net income is also called net earnings and net profit. Because it’s on the last line of an income statement, it’s also known as ‘the bottom line.’

 

Related terms:
How to calculate net profit margin
How do I calculate my net worth?
How to calculate gross profit

Related Xero feature:
Keep track of your numbers with financial reporting

Related Small Business Guide:
How to manage your finances and cash flow

Accounting Terms

Accounting terms and how-tos for beginners. Let us walk you through all the basics that you need know.

What is net income?

Net income is the total amount of profit your business makes after deducting expenses. This includes:

  • the cost of goods sold

  • overhead

  • tax

Net income is a good way of measuring how profitable your business is. Annual net income is your net income for one year.

Net income is also called net earnings and net profit. Because it’s on the last line of an income statement, it’s also known as ‘the bottom line.’

 

Related terms:
How to calculate net profit margin
How do I calculate my net worth?
How to calculate gross profit

Related Xero feature:
Keep track of your numbers with financial reporting

Related Small Business Guide:
How to manage your finances and cash flow

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