Calculate Net Profit

 Net profit

Net Profit is profit before tax is deducted. It is the starting point of the corporation tax in its simplest form ie

Net Profit = Sales (minus sales returns and VAT) minus costs (cost of sales and operating costs)
For example,

Item

Value

Sales [sum total of invoices]

£55,000

Cost of Sales [suppliers cost of product to your business]

£15,000

Gross profit

£40,000

Operating costs [fixed costs to operate the business]

£4,000

Net Profit

£36,000