Revenue and profit: the difference

In short: Revenue is everything you take in. Profit is what remains after deducting all costs. Income tax applies to profit, the small-business limits refer to revenue.

In more detail: Example: a pupil sells stickers for 2,000 euros a year (revenue) and spends 800 euros on material, postage and fees. His profit is 1,200 euros. He pays income tax on the profit, while the small-business limit of 25,000 euros is compared with revenue.

In detail

• Revenue (gross/net): with VAT it is gross, without it net. For small businesses net revenue counts.
• Gross margin: selling price minus cost of goods.
• Profit (before tax): revenue minus all business expenses.
• Withdrawal: money you take privately from the profit is not an expense (Tax reserve and private withdrawals).
• Hourly wage: profit divided by hours worked shows whether the work pays off.

See also: Business income and business expenses, Pricing: hourly rate and margin