How to calculate net profit
Net profit (calculation)
Net profit is gross profit minus operating expenses and taxes. You can also think of it as total income minus all expenses. When calculating net profit, your accountant also makes adjustments for depreciation
How to calculate net profit
Example of a net profit calculation
Let’s say your business sells $20,000 worth of products, and it cost you $8000 to make them. With additional operating expenses of $3000 and taxes of $4000, the calculation would go like this.
Net profit is the money you get to hold onto. The number comes last on the profit and loss statement, which is why it’s called the bottom line. The net profit can be paid out to owners or reinvested in the business.
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