[et_pb_section fb_built=”1″ custom_padding_last_edited=”off|desktop” _builder_version=”4.27.2″ custom_margin=”0px||0px||false|false” custom_padding=”0px||0px||false|false” custom_padding_phone=”0px||||false|false” locked=”off” global_colors_info=”{}”][et_pb_row column_structure=”1_3,2_3″ _builder_version=”4.27.2″ background_size=”initial” background_position=”top_left” background_repeat=”repeat” width=”100%” custom_margin=”0px||0px||false|false” custom_padding=”0px||0px||false|false” global_colors_info=”{}”][et_pb_column type=”1_3″ module_class=”table-contents” _builder_version=”4.23″ background_color=”#f4f4f4″ custom_padding=”25px||25px||true|false” sticky_position=”top” sticky_limit_bottom=”section” sticky_position_tablet=”top” sticky_position_phone=”none” sticky_position_last_edited=”on|desktop” pac_dcm_carousel_specific_module_num=”0″ border_radii=”on|24px|24px|24px|24px” global_colors_info=”{}” custom_padding__hover=”|||”][et_pb_text _builder_version=”4.23″ text_font=”||||||||” global_colors_info=”{}” background__hover_enabled=”on|desktop”][\/et_pb_text][\/et_pb_column][et_pb_column type=”2_3″ _builder_version=”4.16″ custom_padding=”|||” pac_dcm_carousel_specific_module_num=”0″ global_colors_info=”{}” custom_padding__hover=”|||”][et_pb_text admin_label=”Definition description” _builder_version=”4.27.4″ header_2_font_size=”32px” hover_enabled=”0″ header_2_font_size_tablet=”30px” header_2_font_size_phone=”26px” header_2_font_size_last_edited=”on|tablet” global_colors_info=”{}” sticky_enabled=”0″]<\/p>\n
Net profit is a measurement of your business\u2019s profitability after you\u2019ve deducted all business expenses from your revenue.<\/p>\n
This essential metric tells you how much profit you\u2019re taking home from sales, after accounting for all the business costs you incurred in making those sales and running your business.<\/p>\n
Your net profit (or net income) will tell you the true overall profitability of your business.<\/p>\n
Every business will incur expenses in making revenue. These overheads could be rent, wages, materials, taxes et cetera. Your net profit will account for these expenses\u2014and reveal how much money you\u2019re really making.<\/p>\n
To calculate your net profit, you\u2019ll need to add up every business cost and operating expense<\/a> you incurred in creating revenue and in operating your business.<\/p>\n These costs can include, but are not limited to:<\/p>\n [\/et_pb_text][et_pb_image src=”https:\/\/www.reckon.com\/nz\/wp-content\/uploads\/2023\/06\/15._What_is_net_profit_definition-1.png” alt=”What Is Net Profit Definition” title_text=”What Is Net Profit Definition” admin_label=”Image” _builder_version=”4.21.0″ _module_preset=”default” global_colors_info=”{}”][\/et_pb_image][et_pb_text admin_label=”Definition description + related terms” _builder_version=”4.27.4″ header_2_font_size=”32px” hover_enabled=”0″ header_2_font_size_tablet=”30px” header_2_font_size_phone=”26px” header_2_font_size_last_edited=”on|tablet” global_colors_info=”{}” sticky_enabled=”0″]<\/p>\n To arrive at your true net profit, you need to diligently account for every imaginable business expense before you deduct these from your overall revenue.<\/p>\n To calculate net profit for your small business, use the following formula:<\/p>\n Net Profit = Revenue \u2212 Total Costs<\/strong><\/p>\n Net profit is calculated over a given timeframe. Let\u2019s say you took home $10,000 in revenue in one month. In that same month, you incurred total costs of $6000. This means your net profit is $4000.<\/p>\n Your net profit margin is another way of expressing your net profit\u2014namely as a percentage to see how much of your revenue is true profit.<\/p>\n To calculate your net profit margin, use the following formula:<\/p>\n Net Profit Margin = (Revenue \u2212 Total Costs) \/ Revenue x 100<\/strong><\/p>\n Using the example above, this would be $4000 \/ $10,000 x 100. So, your net profit margin would be 40%.<\/p>\n While a company’s net profit considers all overhead costs and operating expenses, your gross profit only accounts for COGS (cost of goods sold).<\/p>\n Your COGS are only the direct production costs involved in creating your product or delivering your service. This means gross profit is useful for understanding the cost per sale, but not the overall profitability of your business.<\/p>\n <\/p>\n See related terms<\/strong> <\/p>\n [\/et_pb_text][ba_social_share icon_bg=”#03002e” icon_padding=”10px|12px|10px|12px|true|true” layout=”classic” show_text=”off” btn_padding=”0px|0px|0px|0px|false|false” btn_bg_color=”RGBA(255,255,255,0)” _builder_version=”4.23″ _module_preset=”default” custom_margin=”50px||||false|false” custom_padding=”25px||||false|false” custom_css_before=” content: %22SHARE THIS%22;|| font-size: 16px;|| font-weight: 700;|| line-height: 22px;|| letter-spacing: 0em;|| text-align: center;|| color: #ff5447;|| margin-bottom: 10px;|| display: inline-flex;|| position: absolute;|| margin-top: 10px;” border_width_top_main=”1px” border_color_top_main=”#e4e4e4″ border_radii_icon=”on|5px|5px|5px|5px” global_colors_info=”{}” custom_css_before_last_edited=”off|desktop”][ba_social_share_child _builder_version=”4.23″ _module_preset=”default” global_colors_info=”{}”][\/ba_social_share_child][ba_social_share_child network_type=”facebook” _builder_version=”4.23″ _module_preset=”default” global_colors_info=”{}”][\/ba_social_share_child][ba_social_share_child network_type=”linkedin” _builder_version=”4.23″ _module_preset=”default” global_colors_info=”{}”][\/ba_social_share_child][ba_social_share_child network_type=”email” _builder_version=”4.23″ _module_preset=”default” global_colors_info=”{}”][\/ba_social_share_child][\/ba_social_share][\/et_pb_column][\/et_pb_row][\/et_pb_section]<\/p>\n","protected":false},"excerpt":{"rendered":" Net profit is a measurement of your business\u2019s profitability after you\u2019ve deducted all business expenses from your revenue. This essential metric tells you how much profit you\u2019re taking home from sales, after accounting for all the business costs you incurred in making those sales and running your business. What does net profit tell you? Your […]<\/p>\n","protected":false},"author":6,"featured_media":0,"menu_order":0,"template":"","meta":{"_et_pb_use_builder":"on","_et_pb_old_content":"","_et_gb_content_width":"","inline_featured_image":false,"_lmt_disableupdate":"no","_lmt_disable":"","footnotes":""},"class_list":["post-264037","glo","type-glo","status-publish","hentry"],"yoast_head":"\n\n
How to calculate net profit<\/h2>\n
Net profit example<\/h2>\n
Net profit margin<\/h2>\n
Know the difference between gross profit and net profit<\/h2>\n
What is gross profit?<\/a>
Gross profit vs net profit<\/a>
How to calculate gross profit margin<\/a><\/p>\n