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Let’s break down two terms you’ve probably heard. Gross income and net income.
Gross is the total, everything you brought in. That’s your ticket sales, merch, grants, tips, whatever.
Net is what’s left after you subtract your expenses. So let’s say your show brings in $10,000, but you spent $8,000 on venues, fees, and costumes. That means your net is $2,000.
Gross is the full tip jar. Net is what’s left after you pay the DJ and replace your tights. This difference matters when you’re planning, budgeting, or evaluating a project because gross tells you what came in and net tells you what you actually keep.
What is Gross Income? What is Net Income?
We don’t mean “gross” as in nasty and stinky (that meaning of the word actually only goes back to the 1950s!). In a financial context, “gross” takes the older meaning of coarse, simple, or rough. So gross income is the rough stuff — it’s everything you bring in for a specific time period.
Net income, on the other hand, takes its name from the latin and french words that mean trim, sharp, or clean. So it’s the amount you get when you trim your coarse (gross) income. What are you trimming out? Expenses! Net income is what’s left over when you subtract your expenses from your income in a specific period of time (e.g., a specific event, a month, a year).
How do I find my Gross and Net Income?
If you’ve been keeping up with your bookkeeping, it’s easy! Run a Profit and Loss report, and you’ve got both numbers right there. At the bottom of the section for Income, you’ll see a “total income” line – that’s your gross. At the very bottom of the statement, you’ll see “net income” spelled out right there. You might see them called “total revenue” and “net revenue” — same thing.
Take a look at this sample Profit & Loss statement to see what we mean:
What goes into Gross and Net Income?
It’s all about the bookkeeping, baby. That means keeping track of your income transactions like check deposits, online donations, and grants. Plus keeping track of your expense transactions, like paying contractors and the light bill.
As long as you’ve got those details locked down, you can figure out your gross income (add up all your income transactions) and net income (take your gross income and subtract out all your expenses). For more on how to track income and expenses, check out our All About Bookkeeping guide.
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