Guide
Gross Income Is Not Profit
A payment from a company is not the same thing as money kept after costs.
Short answer: Gross income is money received before expenses. Profit is what remains after ordinary costs such as product, fees, tools, events, travel, taxes, and unsold inventory.
Gross income
Gross income is money received before subtracting expenses. In income-opportunity materials, it may include commissions, bonuses, or other compensation from the company.
Net income after expenses
Net income is what remains after ordinary costs. For an MLM participant, costs may include joining fees, product purchases, samples, shipping, websites, payment processing, ads, mileage, event tickets, hotel stays, meals, training, subscriptions, taxes, and unsold product.
Inventory and time
Inventory that has not been sold is not the same as profit. Time also matters. A participant can receive some compensation and still earn less than minimum wage after expenses and hours worked.
A simple worksheet
- Total money received from the company.
- Total money received from retail customers.
- Total product, fees, tools, training, events, travel, shipping, and tax costs.
- Value of unsold inventory at realistic resale value, not retail list price.
- Total hours spent selling, recruiting, training, posting, traveling, and attending events.