Profit (calculation)
Profit is revenue minus expenses. For gross profit, you subtract some expenses. For net profit, you subtract all expenses.
Gross profits and operating profits are steps on the road to net profits. Net profits are what you truly get to keep.
Gross profit
Operating profit
Net profit
Profits indicate you’re earning more than you spend:
Gross profit shows you’re selling goods and services for more than they cost you
Operating profit shows you’re making money after paying expenses other than interest
Net profit shows you’re making money after paying all expenses and taxes
See related terms
Handy resources
Advisor directory
You can search for experts in our advisor directory
Profit & Loss template
Download Xero’s profit and loss statement template to show how much money you business is making
Financial reporting
Keep track of your performance with accounting reports
Disclaimer
This glossary is for small business owners. The definitions are written with their requirements in mind. More detailed definitions can be found in accounting textbooks or from an accounting professional. Xero does not provide accounting, tax, business or legal advice.
