What is Net profit and how do you calculate it?  Net profit is your total income minus all expenses.

Step #1 – Work out your Gross profit. Which is your revenue minus costs of goods sold.

Step #2 – Take your gross profit and deduct your operating expenses, things like payroll, rent, insurance, utilities and so on.

Step #3 Deduct tax.

This figure is your Net profit, also known as your bottom line.

Net Profit = Gross Profit – Costs of Goods Sold – Expenses – Tax