How do you properly calculate net income for a small business?
I'm trying to understand my actual profitability better. I know gross profit minus expenses, but there are always adjustments and weird entries. Can someone explain the correct steps for net income accounting in simple terms?
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Start with revenue minus cost of goods sold for gross profit. Then subtract operating expenses, taxes, interest, and any non-operating items. Don't forget depreciation and accruals. For a clear breakdown with examples, check this guide on net income accounting It walks through the formula and common mistakes small businesses make. Clean books make the calculation straightforward.