Hello MQ5! I'm an Enrolled Agent with TurboTax Live.
What are the differences between profit and income?
There are a few key differences between profit and income that are important to understanding when running or managing a business. These differences include:
- Profit is seen when expenses from the revenue are taken out, while income is seen when all expenses incurred by a business are subtracted.
- Profit refers to the difference between how much money is spent and earned in a given time period, while income represents the actual amount of money earned in a given time period.
- Profit is used to determine how much cash flow is available versus the company's total costs, while income shows the total amount of money a company can utilize.
- Profit can be calculated at several points throughout the year to inform a company of its financial strengths and weaknesses. At the same time, income is typically only determined once a year and is the deciding factor as to whether an organization should keep or reinvest its remaining money.
- Profit is dependent on revenue, while income is dependent on both profit and revenue.
**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
