Legal Definitions - net income

Net Income

Net income, also known as net earnings, is the amount of money a company earns after deducting all of its expenses from its total revenue. It is the profit that a company makes during a specific period of time, usually a year.

For example, if a company has a total revenue of $100,000 and its expenses are $80,000, its net income would be $20,000. This means that the company made a profit of $20,000 during that period of time.

Another example would be if a person has a salary of $50,000 per year and their taxes, insurance, and other deductions add up to $10,000, their net income would be $40,000. This means that they take home $40,000 after all of their expenses are deducted.

Net income is an important measure of a company's financial health because it shows how much profit they are making after all of their expenses are taken into account. It is also important for individuals to know their net income because it helps them understand how much money they are actually taking home after taxes and other deductions.