Are Gross Sales and Taxable Gross Sales the Same?

The terms gross sales and taxable gross sales are not the same and can make a huge difference in determining the profits of a company.

Gross sales is a raw figure that includes all sales occurring during a particular time frame. Gross sales is your total sales before numerous categories of expenses are deducted, such as returned items, taxes, license and business fees, rent, utility bills, payroll, the cost of retail items purchased to be resold, or any other costs that a business can expect to incur.

Taxable Gross Sales and Expenses

Taxable gross sales describes the amount of income a company is liable for paying taxes on. A company is permitted to take a tax deduction on many, if not all, of the aforementioned expenses, and is not liable to pay taxes on those amounts.

What remains after all expenses are deducted from gross sales is taxable gross income. A company generally attempts to deduct as many expenses possible to make its taxable gross sales as low as possible, thus minimizing its tax liability.

These same terms apply to individual taxing liabilities as well. An individual's gross income, minus allowed deductions and expenses, leave the taxable gross income for the individual. This figure is what an individual's tax liability is based on.