How to Calculate Net Income
- 1). Calculate the company's total revenue for the year by adding up all of its net sales and any income from other sources. Only include income that was actually received; don't include monies that were owed or expected.
- 2). Add the company's total operational expenses. This includes salaries and overhead expenses. Don't forget to include things like discounts on merchandise, returns and other expenses or losses the company incurred during the year.
- 3). Determine the total cost of all the company's additional expenses, including taxes, financing expenses and other deductions. Add this figure to your company's total operational expenses to determine the company's total overall expenses for the year.
- 4). Subtract the company's total expenses from the company's total revenue. The formula is: "Net Revenue - Total Overall Expenses = Net Income." The total is the company's net income for the year. If this number is positive, it is the company's net gain or profit. If the number is negative, this represents the company's net loss.
