Gross vs. Net Income
What is Difference between Gross and Net Income? Often in the companies and in the foodstuffs that we buy we see that two words are used that many repeat in spite of ignoring their meaning: gross and net. What do “net weight” packages mean? And what do companies with a gross salary or net income mean? If you also do not know the difference between gross and net income, continue reading.
Difference between Gross and Net Income
Gross Income
When we speak of income, the word “gross” refers to the total; without deduction of taxes or similar expenses. It could also refer to sales and gross profits, which are calculated without taking into account the deduction of expenses.
Gross is the whole part. If we apply it to our salary, what it means is that it is calculated without taking into account the discount that is made for health insurance, taxes, profit sharing.
The following example best illustrates the above:
If Mariana is working for a salary of $ 10 an hour and works 40 hours a week, then her gross salary would be $ 400.
Gross income is calculated by subtracting the costs of goods from the income earned. The costs of goods include all costs incurred for the purchase of goods, processing of products, and storage of products … until sale.
Net Income
Net refers to the amount left over after making the deductions. It is the value left after all expenses have been subtracted from gross income, costs and expenses.
Example: Ana Maria has a gross salary of 400 dollars and deducted 60, and then the net would be 340 dollars.
Also, when we see that in canned products it says “net weight”; we must state that it refers specifically to the weight of the product that they can or package contains; without taking into account the wrapping.
In conclusion, if you want to know what your net salary you just have to start discounting all the expenses and taxes that you pay automatically. Maybe take a surprise.
The key Difference between gross and net is Gross is when you take into account the total income as such, without making the deductions of taxes or expenses; while net is what remains when you make tax deductions and so on.
