"Gross receipts" refers to the total amount of revenue you take in, while "income" refers to how much you keep, based on your expenses, deductions and other accounting factors. Understanding what goes into determining your gross receipts and net income helps you plan better financial strategies for your small business.
The total amount of revenue you bring in creates your gross receipts, according to the American Institute of CPA's The Tax Adviser portal. Revenue includes the cash, charges or digital receipts you receive from sales, but it also includes other financial gains. These might include rent you receive on excess office space you lease out, income from investments, interest earned, promissory notes, bad debt write-offs, legal awards, tax credits, and other forms of financial gains.
Work with an accounting and tax professional to determine what you must classify as gross receipts. For example, the COVID-19 pandemic resulted in government loan programs to small businesses, some of which were forgiven if the employer met specific criteria based on the use of the money.