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Small Business Accounting 101

An essential part of your business plan is being able to calculate your net income by identifying your business's revenue and expenses. These may include revenues, expenses, gains, losses, and net income.


Revenues

This is income generated from normal business activities over a period of time. This is typically calculated as the amount of goods/services sold multiplied by the price it was sold for.


Expenses

The costs associated with normal business activities that are subtracted from revenue. Some examples include rent, wages, and utilities expenses.


Gains

An increase in net income that is generated from non-business activities. An example includes the monetary gain from selling a piece of equipment at a price higher than what it was bought for.


Losses

A decrease in net income that is generated from non-business activities. An example included selling a piece of equipment at a price lower than what it was bought for.