The difference between income and profit.

Many people have a dream to start their own business, but not everyone knows where to start. Economists advise: start by learning the basics of economics, and only after understanding the basic principles, start building your business. If you find it difficult to flip through volumes of economic theory and pore over financial activities, then you can immediately proceed to practice, but this does not mean that you will immediately make a profit. Although, it is possible that the income from your activity will be substantial. If you have not yet figured out whether there is a difference between profit and income, we suggest that you familiarize yourself with the differences between these two concepts.

Determination of income and profit

Income is all monetary or material values ​​received by an individual, legal entity, organization or state for a certain period.

Profit - that for the sake of which the activities of the entrepreneur are carried out, that is, the financial resources remaining after deducting the costs of production and sale of products.

Formula for calculating income and profit

These two financial performance indicators have a specific calculation formula.

So, the income is calculated as follows:

Income = all proceeds

Moreover, the sample is made for a certain period.

Profit is calculated using a different formula:

Profit = income - all costs of production and sale.

Moreover, the net profit, or, in simple terms, the money remaining in the hands of the entrepreneur is profit, from which taxes and other deductions have already been deducted.


  1. Income is all money received over a certain period of time, and profit is money after taxes, production costs and other costs.
  2. Income is calculated as the total amount of money received as a result of the sale of goods or services, and profit is income minus the costs of production, purchase and sale of goods or services.