Gross receipts are some of the most important things to make for your business, so where do you start?
While running a business is no easy task, you’ll come across several documents that’ll require you to reference previous income and expenses. Gross receipts happen to display some of that info, and they’re easy to make if you know how to calculate them.
To save you as much time as possible, we’ll go over everything you need to know about them. This will ensure you can focus on growth instead of accounting.
Keep on reading to get the answers you need.
What Are Gross Receipts?
Many businesses rely on gross receipts to help them with a variety of things. Gross receipts outline exactly how much a business has earned throughout an accounting period. This is helpful when determining how much revenue has been collected during the year.
The exact components of a gross receipt vary depending on where a business is located. Because of this, you’ll need to research local requirements before putting together gross receipts if you’d like to use them later.
Why You Should Save Gross Receipts
Any time you want to acquire the likes of business loan funds, lenders can use gross receipts to determine how much you qualify for.
This is especially helpful when applying for PPP loans because you need to show that you’ve recently earned less than you did a year ago. If you click here, you can learn more about using gross receipts for PPP and other loans.
Aside from getting business loan funds, you can use gross receipts to pay the gross receipts tax (GRT) that’s often imposed on businesses. Like most things, you must search online to determine if you’re required to pay this tax.
Calculating Gross Receipts
Learning how to calculate gross receipts is simple, especially if you use accounting software. All you must do is determine which period you’ll measure (monthly, quarterly, annually), then start gathering invoices from that period.
After gathering everything, you can add up the total amount earned from products and services. For example, you earn $20,000 from products and $10,000 from services in a year. Your annual gross receipts for the year would be $30,000.
Expenses are not considered when calculating gross receipts, so don’t worry about how much you spend. The only thing you should be calculating is your total income during the period you’ve chosen.
Start Making Gross Receipts Now
After reading this article, you now know how easy it is to calculate gross receipts. Whether you’d like to apply for business relief programs or improve your bookkeeping, gross receipts will ensure you have all the info you need.
With this in mind, we encourage you to start making gross receipts as soon as possible. The quicker you get accustomed to them, the easier it’ll be to grow your business.
For more business advice, check out the rest of our blog.
