Business Income
In general, all the money you receive from your business is considered income.
For product-based businesses, you'll need to calculate two important income figures. The first one is your gross income, i.e., all the money that you receive from sales of the product. The second is your gross profit, i.e., your sales figure minus the cost of the goods sold.
“Cost of goods sold” is the total of the costs directly involved in making or buying the product for resale. Assume, for instance, that it costs you $100 to buy the materials used to put together gift baskets that you sell for $250. Your gross income is $250, your cost of goods sold is $100, and your gross profit is $150.
Service-based businesses don't usually have a cost-of-goods-sold figure. They often declare their sales as both their gross income and their gross profit.
