Net Income Calculator
Calculate your business net income after all expenses and taxes.
What is net income?
Net income (also called the "bottom line") is what's left of your revenue after subtracting the cost of goods sold, operating expenses, interest payments, and taxes. It's the clearest single measure of whether a business is actually profitable after all its obligations.
How net income flows from revenue
The calculation moves through several stages: revenue minus cost of goods sold gives gross profit; gross profit minus operating expenses (rent, salaries, marketing, etc.) gives operating income; operating income minus interest expense gives pre-tax income; and pre-tax income minus taxes gives net income. Each stage tells a different story about where your money is going.
This is a simplified calculation for estimation purposes — real financial statements include additional line items like depreciation, amortization, and one-time charges. Consult an accountant for official financial reporting.
Frequently Asked Questions
What is the difference between gross profit and net income?
Gross profit is revenue minus cost of goods sold only. Net income goes further, also subtracting operating expenses, interest, and taxes — it's the true bottom-line profit after everything.
Why is net income lower than revenue?
Revenue is the total money coming in before any costs are subtracted. Net income accounts for everything it costs to generate that revenue and run the business, so it's almost always meaningfully lower.
What counts as an operating expense?
Operating expenses typically include rent, salaries, marketing, utilities, insurance, and other day-to-day costs of running the business, separate from the direct cost of producing goods or services (COGS).
Is net income the same as cash flow?
No — net income is an accounting measure that can include non-cash items like depreciation, while cash flow tracks the actual cash moving in and out of the business. A business can be profitable on paper but still have cash flow challenges.
How can a business increase its net income?
The main levers are increasing revenue, reducing cost of goods sold, cutting operating expenses, refinancing debt to lower interest costs, or taking advantage of legal tax deductions and credits.
What tax rate should I use in this calculator?
Use your effective business tax rate, which depends on your entity type (C-corp, S-corp, LLC) and jurisdiction. The default of 21% reflects the flat federal C-corp rate, but your actual effective rate may differ.
How accurate is this net income estimate?
This is a simplified calculation for quick estimation. Official financial statements include additional adjustments like depreciation and one-time items — consult an accountant for precise reporting.