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Our small business accountants in Sydney explain how to obtain your gross and net profit margins

We believe that every business owner needs to somewhat know how to obtain his or her gross and net profit margins, after all it will show how much profit you are earning. Our small business accountants in Sydney will tell you how to obtain your gross and net profit margins.

Firstly, you need to know what they both mean:

• Gross profit margin: is the measurement of a company’s efficiency during the income production and is the amount of profit left after all direct and indirect costs are paid
• Net profit margin: is the measurement of profit you make for every $1 you earn in revenue and how much money you retain after you pay all overhead costs for the company

How do we calculate your gross profit?

• Gross Profit = Total Revenue – Costs of Goods Sold
• Gross Profit Margin Percentage = Gross Profit/Total Revenue x 100

How do we calculate your net profit?

• Net Profit = Gross Profit – Company Overheads and Taxes (net income)
• Net Profit Margin = Gross Profit/Net Income x 100

We hope our business accountants helped you gain some understanding on how you calculate how much money your business is earning.

Feel free to contact our small business accountants in Sydney for all your accounting needs.