How to Calculate Net Profit for Your Business: Formula, Steps, and Practical Example

To calculate your business's net profit, subtract the cost of goods sold or services delivered, operating expenses, financing costs, and income taxes from revenue, accounting for other income and expenses. Unlike gross profit, net profit reflects the remaining earnings after these costs.

For example, revenue of 50,000 minus sales costs of 30,000, operating expenses of 12,000, and other expenses and taxes of 3,000 equals a net profit of 5,000 and a 10% net profit margin. Review your income statement monthly and distinguish profit from cash flow. Try Cash Cloud for free to explore financial tracking and reporting tools.