business benefits

Start » Financial management » business benefits

Within the accounting of a company, there are different types of benefits that you can obtain as a result of your economic activity. Therefore, in this post we are going to explain the definition of business benefits and the different types that exist. 

Read on to discover them. 

What are business benefits?

Business benefits are those remuneration obtained by commercial companies or individual companies that are distributed among all participating partners. 

The definition of business benefits would be the difference between the total income of a company obtained from the sales of a product, plus the assumed costs of marketing the product. These costs would be those related to the production and distribution of the product. 

But, what is the way that companies present their benefits? By means of the income statement, companies give this information about your profits or losses to your partners, breaking down the income and the account of the marketing expenses of the product. 

Types of business benefits

exist different types of business benefits, which we explain below: 

Gross profit

Gross profit is the result that arises from subtract the income and expenses derived from the economic activity, before deducting taxes and amortizations. In short, it is about the difference between what was sold and what was bought without taking other costs into account. 

Net profit

Is he total result of the economic activity of a company during a certain period of time. This type of benefit is the result of subtracting the expenses derived from the economic activity from the net income.

The expenses that are eliminated from this calculation become: 

  • asset accounting, that is, the amortization and depreciation of the investments of the company
  • Interest paid for different concepts. 
  • The taxes. 

Accounting profit

The accounting profit refers to the difference (positive) between the income of the company and the expenses that are necessary for the company to be able to participate in the economic activity (that is, that can generate sales). Therefore it includes: 

  • Income: sales, provision of services, etc.
  • Bills: Purchase of assets, salary of workers, etc.

If the difference between these components is positive, the BE (Economic Benefit) will result. This gives us information about the efficiency of the economic activity of the company since neither interest nor taxes are accounted for. With this data it is with Economic comparisons between companies are made by being free of financial burdens. 

Fiscal benefits

The tax benefits are the result that remains in the Corporate Tax after deducting the taxes that must be paid given the results of the economic activity. There are different types of tax benefits: 

  • Tax exemption benefit: The tax exemption is a taxation right that can be enjoyed by a natural or legal person exempt from bearing certain aspects of the economic tax burden. That is, they are exempt from paying certain types of taxes. 
  • Benefit from tax rebates: Tax credits are reductions in the amount of the base used to calculate the tax or deductions in the money to be paid by the taxpayer. 
  • Benefit from tax deductions: Tax deductions are reductions in the payment or income of taxes in different concepts, how is the expense dedicated to producing income. 

Conclusion

Taking these benefits into account is vitally important for know the operation of your company and be able to make forecasts for future economic activity. It is important to have the accounts of your company well controlled to avoid billing and non-payment problems and enjoy healthy accounting. 

If you need help with your company's accounting, at Alter Finance we offer you our financial advice to solve your doubts. We will be happy to assist you. 

Leave a Comment

English (UK)