Net and Gross value for Websites/Companies

[dkr]

Hi,

I'm just wondering what the meaning of these two words are: Net and Gross. I know Gross means the overall revenue that someone receives, and I know that net equals the value left after taxes/etc. However, does the gross value of a website also include the amount that haven't been paid to hired employees, or no?

For example, I have a site that earns $50,000 per month overall from selling services. However, I employ 5 workers to provide my clients with the services I sell. I pay each employee $2,000 per month (5x2000=10,000). So is the gross income of my website $50,000 or just $40,000?

Thank you,
Donny

 

[shockie]

my bad, service industry = no product: subtract the $10,000.

 

[andysyme]

Thinking back to my A level Business Studies and Accounting... your revenue is one figure, there is no differentiation between gross and net, it is the amount of money your business receives from sales, how much money is coming into your business. You then use this number to calculate your profits. In the "real world", Gross profit is your revenue minus the cost of goods sold, so that would be the materials used to make the product, the metal and wheels to make shoppping trolleys for example. On the Internet, of course, it isn;t that clear cut, as we aren't making any physical products as such, so the cost of goods sold is effectively zero. Your net profit is your gross profit minus all your overheads, or your fixed costs, costs which you pay regardless of how many products you sell. I guess you could quote your revenue and answer any quesitons about expenses etc.! Don't know if that clears anything up for you, it is very late here!

Andy

 

[dkr]

Rep added for both. Thank you very much.