Profit - this is what you are taxed on

To figure out if a business made or lost money, this is the simple formula:

Business Income - Expenses = Profit (or Loss)

Income is money received from providing services or selling products to your customers.

Expenses are anything that goes into the production of income. See blog “What can I write off?”

If your income is greater than the expenses, you have profit :-) Income tax is calculated on the profit (income after expenses). In general, keep about 20% of the profit set aside for taxes.

If your expenses are greater than your income, there is a loss :-( No income tax is required to be paid if the business didn’t make any money.

Keeping track of your company's money is key for growth. A Profit and Loss statement (also called P&L or Income Statement) is a vital report that shows your income, costs, and how much profit you're making. QuickBooks helps you easily record income and expenses so you always know the profit of the business.