Total sales over covered period = Gross revenue Gross revenue doesn’t really have a formula, but this is what it would look like: It’s equal to your gross sales – the total amount your company took in over a certain period of time. You’ll report your business’s gross revenue on your income or cash flow statement as top-line revenue. Net revenue measures how much money your company brought in after accounting for all expenses in the same period. Those payments are deducted later in your business’s accounting process, after you’ve calculated net revenue. While interest payments are another item that you’ll deduct from your gross revenue to calculate your net revenue, dividend payments usually are not. Technology: This includes costs for software and other subscriptions or licenses. ![]() Legal and administrative costs: Any fees paid to lawyers, accountants and other consultants come out of your net revenue.Taxes: Payroll taxes, excise taxes, sales tax and income tax are all deducted before you arrive at net income.Employee compensation: This includes salaries, wages, commissions and employee retirement benefits.Rent and utilities: This means payments for facilities, electricity, water and related services.Office supplies: These are everything you use in the office, from paper clips to toilet paper.Marketing costs: These include the costs of advertising, web development, and other brand-building or marketing efforts.Cost of goods sold: This is the direct costs your company incurs to manufacture goods or purchase inventory.Here are some things that account for the difference between gross and net revenue: ![]() These include the direct costs of goods sold (costs that are directly allocable to particular units or product lines) as well as other variable expenses and fixed costs (overhead). The difference between your gross and net revenue is equal to your company’s expenses. What is the difference between gross revenue and net revenue? Net income provides a much more comprehensive view, but it’s hard to interpret without gross revenue for context.Įditor’s note: Looking for the right accounting software for your business? Fill out the below questionnaire to have our vendor partners contact you about your needs. You can’t budget based on your company’s gross sales. It’s important to know the difference between the two, because gross revenue only provides part of your company’s overall picture. Net revenue, or net income, is equal to a company’s gross revenue minus all of its expenses, including fixed expenses. It’s all of the money the business received, not accounting for any expenses whatsoever. In accounting, a company’s gross revenue is its total gross sales over a certain period of time.
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