Bookkeeping

Net income

Net income is the profit left after subtracting all expenses from revenue, including cost of goods sold, operating expenses, interest and income taxes. It is the bottom line on the profit and loss statement.

Reviewed November 3, 2026

Why it matters

Net income is the starting point for the tax return and the owner's view of profitability. It is not the same as cash in the bank.

Example

A business has $500,000 of revenue, $300,000 of cost of goods sold and $150,000 of operating expenses. Net income is $50,000 before interest and taxes.

Related terms

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Sources

Checked November 3, 2026. Public pages and tax rules change; confirm them before relying on them.

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