Net Loss


DEFINITION of 'Net Loss'

The result that occurs when expenses exceed the income or total revenue produced for a given period of time. For tax purposes, net losses in one time period can be used to counteract the income/gains generated in another time period. Under tax law, this loss can be carried back as far as two years.

Also referred to as a net operating loss (NOL).


A person or company with a net loss has not made a profit for a given year. Newer businesses often run at a net loss for the first few years, while acquiring one-time high cost expenses such as equipment, buildings, technology and rights. Businesses that have a net loss don't necessarily go bankrupt because they may opt to use their retained earnings or loans in order to stay afloat. This strategy, however, is only short term, as a company without profits cannot continue surviving for a long period of time.

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