Income

What is income?

Income is money your business receives. For most contractors and service providers, income comes primarily from payments for completed work. When a client pays your invoice, that payment is income. The term is often used interchangeably with revenue, though in some contexts they have slightly different meanings.

Tracking income accurately is essential for understanding your business's financial performance and meeting tax obligations.

Types of business income

Small businesses may have several income sources:

• Service income — Payment for work performed (the primary source for most contractors)
• Product sales — Revenue from selling goods
• Interest income — Earnings from business savings or investments
• Other income — Rent, royalties, or miscellaneous receipts

Income vs. profit

Income (or revenue) is the total money coming in. Profit is what's left after you subtract expenses. You can have high income but low profit if your costs are high. Both matter: income shows your business activity level, while profit shows whether that activity is actually making you money.