What is the difference Revenue, income and profit are not synonyms, and confusion in terms can lead to problems and losses. Let’s figure out what the difference is, what each indicator displays and why a business needs them. In the end, we will give advice on increasing revenue and profit for owners of online stores and marketplace sellers.
Brief: What is the difference between revenue, profit and income
Income, revenue, and profit are three terms that refer to the money a company or entrepreneur makes while doing business. But they are not interchangeable:
- Income is all the money a business receives from its core and non-core activities.
- Revenue is money earned from core business activities.
- Profit is the difference between income and all expenses incurred.
Unlike profit, revenue and income cannot be chinese overseas america database negative. They can only be zero if the company does not conduct any activity – neither primary nor secondary.
Below we will examine each concept in more detail, define what it includes, and also show how to calculate the amount of income, revenue, and profit.
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What is income
Income is the funds that a business receives from its how to increase your traffic with seo for small businesses core and non-operating activities. However, not all receipts to an account can be income: for example, they do not include contributions from owners, as well as loans, because the company did not receive income, but temporarily borrowed funds and will be obliged to return them. Also, full or partial prepayment for goods or services does not count as income – it is taken into account later, upon fulfillment of obligations.
As an example, let’s take the online store selling self-assembled computers and components for them, “SborPK”.
For December 2024, the company:
- sold computers and components for 1,024,000 rubles;
- received compensation for damages from maldivian lads a supplier who sold a batch of defective video cards in the amount of 512,000 rubles;
- rented out an empty office space for a programming master class for adults for 25,000 rubles;
- took out a loan of 2,048,000 rubles to expand the business.
All money that a company earns or receives, rather than borrows or incurs debt, will be its income.