Gross Business Income

The total business sales less cost of goods sold.

Gross business income is calculated on a business tax return, and is calculated as the total business sales minus the cost of goods sold. In financial terms, ‘gross’ refers to an initial amount prior to any deductions, withholdings or expenses. You will see a gross income figure on your business’s income statement, also known as a profit and loss statement. 

What isn’t gross business income?

Gross business income should not be confused with a business’s gross revenue or sales, which is the amount of money brought in by your business through sales. Nor is it gross profit, which is gross revenue or sales before the cost of producing that revenue is subtracted. It also isn’t net income, which is sometimes referred to as profits or earnings and is calculated by taking your business’s gross income number and subtracting all deductions, tax credits and cost of goods sold.

Practical Application Example

“ If your business’s gross profit (income) is £400,000 and sales are £1,000,000, this equates to a 40% margin. This means that your company sold £1,000,000 worth of products, with its cost of sales having been £600,000. ”