Income is a term that’s certainly familiar. However, many entrepreneurs immediately assume that income refers to business revenue. Therefore, income is the net profit earned from sales minus operating expenses.
However, this term also encompasses revenue, the most fundamental aspect of finance. Therefore, every business owner must thoroughly understand the types of income, as this impacts the company’s stability and financial health.
What is Income?
Income can be defined as the net profit that replaces the total funds earned from the company’s revenue. Simply put, the business owner has already adjusted it for other costs and additional income over a specific period.
Meanwhile, the method that can be used to find out the total net profit obtained by the company is to subtract the amount of gross income from the costs used for operational needs (debt interest, rental costs, depreciation costs, and utilities), total sales costs and emergency expenses.
Lalu, apa itu pemasukan ekstra adalah pemasukan yang didapatkan dari menjumlahkan bunga hasil penjualan dengan surat berharga.
Types of Income
There are several types of income in business, whether obtained actively or passively, namely:
1. Active income (earning income)
Active income or earning income is a type of income obtained from business activities that require the existence or direct involvement of the business owner.
Upah dari pekerjaan tetap atau pemasukan dari aktivitas bisnis yang dilakukan secara aktif juga masuk ke dalam jenis income ini. Biasanya, pemasukan ini memerlukan waktu serta usaha yang aktif dari berbagai pihak yang memperolehnya.
2. Passive income
Furthermore, passive income is income earned without requiring intensive activity, either in terms of time or physical effort. For example, income earned from stock and property investments.
Additionally, dividends from stock investments and royalties from patents or copyrights are also considered passive income. This type of income is also earned continuously and can generate passive income over a long period of time.
3. Portfolio income
Finally, portfolio income is the type of income derived from a company’s investment portfolio. For example, income derived from bonds, mutual funds, and stocks generate income from dividends, interest, or capital gains. This type of income also depends on the performance of the investment portfolio, which can fluctuate.
Meaning of Revenue
Meanwhile, revenue is a term frequently used at the top of a company’s financial statements. Generally, it includes the total cash generated through the sale of products and services, which constitute the business’s primary operational activity.
In general, the revenue shown is subtracted from discounts or returns. Therefore, revenue can be defined as the net profit earned by a company over a specific period of time.
For example, if you are running a culinary business, the revenue you get comes from the number of sales you have made within a certain period of time, for example one month or one year.
If you offer a discount, revenue can be obtained by subtracting the total amount of income from the discount offered.
What is the Difference Between Income and Revenue?
Income and revenue are two different terms. Revenue is the gross income earned from the sale of products or services over a specific period. Meanwhile, income refers to the net profit earned over a business period.
Apart from their meanings, you can also understand the difference between income and revenue based on the following two aspects.
1. Source of income
Total revenue generated isn’t solely derived from sales, but can also come from investments in specific instruments, deposit interest, or yields. Meanwhile, income is derived from business results or the total sales of both products and services.
Furthermore, these results are considered the company’s overall income. Therefore, inappropriate revenue sources can impact the company’s total revenue.
2. How to calculate
Calculating revenue can be done by adding up all costs or elements of the recipient. Meanwhile, a company’s income can be calculated using two methods: net profit or gross profit.
In order to calculate net profit, the company must first reduce the total gross profit by other indirectly related costs, for example the production process, taxes, advertising for promotion, and other costs.
Furthermore, gross profit is obtained after the company subtracts the value of income obtained from the Cost of Goods Sold (HPP).
That concludes the explanation of income, its types, and how it differs from revenue in business. To increase company revenue, business owners must monitor operational activities and maintain accurate and meticulous financial records.
Because good financial record-keeping also indicates a company’s financial health, including knowing its income and revenue figures. To make it easier to monitor business operations, you can use the Labamu app.
This app boasts a variety of exciting features that simplify business operations. It includes POS, cashier management, and billing and reporting features. Want to optimize your business? Let’s use Labamu!
