What is Net Profit?

Net Profit
Net Profit, also known as the bottom line, net income or net earnings, is the actual profit made by a business over a given time. Net Profit is worked out by subtracting total expenses from total revenue.

A business’s Net Profit is the money left over after all overheads, operating costs and interest have been paid.

Overheads are the ongoing administrative costs of running a business. These include items such as rent, utility bills and insurance. Operating expenses are directly associated with production, such as raw materials, and a business could be paying interest on a loan or debt. All these factors will have an effect on Net Profit.

You pay tax on the Net Profit of a business. This may take the form of corporation tax or personal (income) tax depending on the type business it is.

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