Gross income is a fundamental financial term for freelancers. It represents your total revenue before any costs or taxes are taken out.
What is Gross income?
Gross income is the total amount of money you earn from all your freelance work in a given period. This includes all payments from clients, whether received via platforms, direct contracts, or networking, before you subtract any business expenses, fees, or taxes.
Why is this important?
Tracking your gross income is vital. It shows your business's top-line performance and earning potential. It's the starting point for calculating your profit, setting budgets, and understanding your tax obligations.
How does it work?
You calculate it by adding up all client payments. For example, if you earn $5,000 from three different projects in a month, your monthly gross income is $5,000. Remember, this is not the money you keep.
Pros and cons
The main pro is that it gives a clear view of your revenue growth and market demand. A key con is that it can be misleading; a high gross income doesn't mean high take-home pay once expenses like software, taxes, and platform fees are deducted.
Conclusion
Gross income is your business's raw earnings number. While essential for tracking, always look at it alongside your net income (what you keep). This gives you the full picture of your freelance financial health.
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