{"id":17419,"date":"2024-01-18T12:41:54","date_gmt":"2024-01-18T12:41:54","guid":{"rendered":"https:\/\/www.sage.com\/en-gb\/blog\/?post_type=sage_glossary&#038;p=17419"},"modified":"2024-01-18T12:43:14","modified_gmt":"2024-01-18T12:43:14","slug":"what-is-net-income","status":"publish","type":"sage_glossary","link":"https:\/\/www.sage.com\/en-gb\/blog\/glossary\/what-is-net-income\/","title":{"rendered":"What is net income?\u00a0"},"content":{"rendered":"<header class=\"entry-header has-dark-background-color entry-header--has-illustration entry-header--has-illustration--generic\">\n\t<div class=\"container\">\n\t\t<div class=\"entry-header__row row align-center\">\n\t\t\t<div class=\"col col-lg-7 col-xlg-6 entry-header__content\">\n\t\t\t\t\t\t\t<div class=\"component component-single-header\">\n\t\t\t\t\t\t\t\t\t\t<div class=\"entry-header__misc text--subtitle text--uppercase text--small\">\n\t\t\t\t\t\t\t<a href=\"https:\/\/www.sage.com\/en-gb\/blog\/glossary\/\" class=\"entry-header__link\">Glossary definition<\/a>\t\t\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t<div class=\"entry-title-wrapper\">\n\t\t\t\t\t<h1 class=\"entry-title\">\n\t\t\t\t\t\tWhat is net income?\u00a0\t\t\t\t\t<\/h1>\n\t\t\t\t<\/div>\n\n\t\t\t\t\n\t\t\t\t\n\t\t\t\t\n\t\t\t<\/div>\n\n\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t<\/div>\n\t<div class=\"single-post-details container\">\n\t\t<div class=\"col\">\n\t\t\t<span class=\"reading-time\"> min read<\/span>\n\t\t<button\n\t\t\ttype=\"button\"\n\t\t\tclass=\"social-share-button button button--icon button--secondary js-social-share-button\"\n\t\t\tdata-share-title=\"What is net income?\u00a0\"\n\t\t\tdata-share-url=\"https:\/\/www.sage.com\/en-gb\/blog\/glossary\/what-is-net-income\/\"\n\t\t\tdata-share-text=\"Please read this interesting article\"\n\t\t>\n\t\t\t<span class=\"social-share-button__share-label\">Share<\/span>\n\t\t\t<span class=\"social-share-button__copy-label\" hidden>Copy Link<\/span>\n\t\t\t<span class=\"social-share-button__copy-tooltip\" aria-hidden=\"true\" hidden>Copied<\/span>\n\t\t<\/button>\n\n\t\t\t\t<\/div>\n\t<\/div>\n<\/header>\n\n\n\n<h3 class=\"wp-block-heading\">What does net income mean? <\/h3>\n\n\n\n<p class=\"\">Net income is your company\u2019s total\u202fprofits\u202fafter deducting all costs of operation. \u00a0<\/p>\n\n\n\n<p class=\"\">Costs of operations include business expenses such as inventory, insurance, salary payouts, leased or financed space, equipment costs, advertising, miscellaneous expenses\u2014anything that you\u2019ve paid in service of your business. <\/p>\n\n\n\n<p class=\"\">Also included in the costs of operating a business are depreciation, loss on investments, and taxes.\u00a0<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">How to define net income?\u00a0<\/h3>\n\n\n\n<p class=\"\">The simple net income definition is your company\u2019s net profits or net earnings.&nbsp;&nbsp;<\/p>\n\n\n\n<p class=\"\">Commonly used to determine the profitability of individual sections or a business as a whole, factoring net income is an important evaluative measure for any business.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">How to calculate net profit?\u00a0<\/h3>\n\n\n\n<p class=\"\">How to calculate net profit or operating income:&nbsp;<\/p>\n\n\n\n<p class=\"\"><strong>Net Profit = Total Revenue \u2013 (Expenses including overheads + Tax)\u00a0<\/strong><\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Net income or net profit?\u00a0<\/h3>\n\n\n\n<p class=\"\">Net income and net profit are often substituted for each other. <\/p>\n\n\n\n<p class=\"\">However, the meaning differs slightly in that net income is the final calculation of the total remaining income of the business in a certain period, after all deductions including equity held during the specific timeframe.\u00a0<\/p>\n\n\n\n<p class=\"\">Net profit relates to only the profit and doesn\u2019t consider certain types of equity, like those held by shareholders. So, when performing financial calculations, make sure you are using the right net figures.&nbsp;<\/p>\n\n\n\n<p class=\"\">Both net income and net profit can be in minus figures, which shows that you are making a loss. They are important indicators to you and your stakeholders of the financial health of your business.&nbsp;<\/p>\n\n\n<div class=\"single-cta\">\n\t<div class=\"single-cta__positioner\">\n\t\t<div class=\"single-cta__wrapper has-dark-background-color\">\n\t\t\t<div class=\"single-cta__content\">\n\t\t\t\t\t\t\t\t<h2 class=\"single-cta__title h3\">Subscribe to the Sage Advice newsletter<\/h2>\n\n\t\t\t\t\t\t\t\t\t<div class=\"single-cta__description\">\n\t\t\t\t\t\t<p>Join more than 500,000 UK readers and get the best business admin strategies and tactics, as well as actionable advice to help your company thrive, in your inbox every month.<\/p>\n\t\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<a\n\t\t\t\t\t\thref=\"#gate-b1a63862-3fa0-4a5e-bb67-c76b88bbc6b8\"\n\t\t\t\t\t\tclass=\"single-cta__button button button--primary\"\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t>Subscribe now<\/a>\n\t\t\t\t\t\t\t<\/div>\n\n\t\t\t\t\t<\/div>\n\n\t\t\t\t\t<img decoding=\"async\" width=\"1440\" height=\"810\" src=\"https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2022\/04\/GettyImages-1073797282-1-1440x810.jpg\" class=\"single-cta__image\" alt=\"\" loading=\"lazy\" srcset=\"https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2022\/04\/GettyImages-1073797282-1-1440x810.jpg 1440w\" sizes=\"auto, (min-width: 48em) 33vw, 100vw\" \/>\t\t\t<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>What does net income mean? Net income is your company\u2019s total\u202fprofits\u202fafter deducting all costs of operation. \u00a0 Costs of operations include business expenses such as inventory, insurance, salary payouts, leased or financed space, equipment costs, advertising, miscellaneous expenses\u2014anything that you\u2019ve paid in service of your business. Also included in the costs of operating a business [&hellip;]<\/p>\n","protected":false},"author":346,"featured_media":11628,"template":"","meta":{"_sage_video":false,"footnotes":""},"tags":[135],"class_list":["post-17419","sage_glossary","type-sage_glossary","status-publish","has-post-thumbnail","hentry","tag-business-finances"],"distributor_meta":false,"distributor_terms":false,"distributor_media":false,"distributor_original_site_name":"Sage Advice UK","distributor_original_site_url":"https:\/\/www.sage.com\/en-gb\/blog","push-errors":false,"_links":{"self":[{"href":"https:\/\/www.sage.com\/en-gb\/blog\/api\/wp\/v2\/sage_glossary\/17419","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.sage.com\/en-gb\/blog\/api\/wp\/v2\/sage_glossary"}],"about":[{"href":"https:\/\/www.sage.com\/en-gb\/blog\/api\/wp\/v2\/types\/sage_glossary"}],"author":[{"embeddable":true,"href":"https:\/\/www.sage.com\/en-gb\/blog\/api\/wp\/v2\/users\/346"}],"version-history":[{"count":0,"href":"https:\/\/www.sage.com\/en-gb\/blog\/api\/wp\/v2\/sage_glossary\/17419\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.sage.com\/en-gb\/blog\/api\/wp\/v2\/media\/11628"}],"wp:attachment":[{"href":"https:\/\/www.sage.com\/en-gb\/blog\/api\/wp\/v2\/media?parent=17419"}],"wp:term":[{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.sage.com\/en-gb\/blog\/api\/wp\/v2\/tags?post=17419"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}