What Is Net Income?

by Craig Anthony

0 min read

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.

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