2016-12-09 00:00:00 Profit & Loss English Net income is the total income after all eligible deductions. Find out what this number indicates and how small businesses in Canada report... https://d1bkf7psx818ah.cloudfront.net/wp-content/uploads/2017/03/08214647/Unsure-Woman-Checking-Net-Income.jpg What Is Net Income?

What Is Net Income?

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The net income is the income after all eligible business expenses. This figure indicates whether a business is profitable. For example, company A has a sales revenue of $1 million and high expenses, so it has a net income of only $10,000; company B has a sales revenue of $100,000 with low expenses, so it has a net income of $50,000. Even though company A has a higher revenue, company B is more profitable.

In Canada, small businesses and self-employed professionals report their net income on Form T2125 at tax time. For small businesses, net income is their business income (the revenue for selling products or services) minus their deductible expenses. For self-employed professionals, their net income is their professional income (the money they make for providing professional services) minus their deductible expenses.

Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.

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