Actual profit and billing: what are the differences and how to calculate?
Understanding about finance and tax accounting is essential for anyone working in sectors related to financial, accounting and administrative management of companies. After all, these departments are interconnected and need to work in alignment.
Therefore, all knowledge about them is valid for managers and employees, especially in medium and large companies. In this sense, it is important to understand the concepts of actual profit and billing, as they are frequently used in business management.
To understand more about the differences between actual profit and revenue, just continue reading. In this article, you’ll get to know each of these terms and learn how to calculate them.
Let’s go?
What is billing and how is it calculated?
Revenue is the total amount obtained by a company from the sale of its products or services during a given period. For example, if the organization sold 4,000 items at a price of R$100 in a month, its revenue will be R$400,000 in that period.
This financial indicator presents several functionalities for a business. The first is the measurement of sales performance. By observing the billing, it is possible to understand if the brand attracts the public and is managing to make good sales, for example.
In addition, the indicator allows understanding which strategy is most interesting for the company. By comparing the company’s revenue before and after the implementation of a new feature, management can find out whether this new feature brought positive results or not.
Billing can also be used as a goal for the company’s growth. From the definition of this objective, the managers can elaborate and execute a plan to reach the desired performance.
One more use of billing is to allow calculating profit indicators and understanding the financial health of the business. Finally, it also serves as a basis for calculating taxes payable to the Government and as a criterion for defining the size of the company in the appropriate legal framework.
What is real profit and how can it be calculated?
Knowing what billing is, it’s time to understand what real profit is. The term refers to the taxation regime in which the Corporate Income Tax (IRPJ) and the Social Contribution on Net Income (CSLL) are calculated from the company’s net income.
This is a performance indicator calculated from the subtraction of expenses from the total invoiced. It is worth knowing that the actual profit can be interesting when the company’s net profit is equal to or less than 32% of the revenue calculated in the taxable period.
To understand better, consider the previous example, of the company that earned 400 thousand. If it had a total cost of R$ 280,000 in the same period, its net profit was R$ 120,000. In percentage, the actual profit is 30%.
Companies that opt for the actual profit tax regime must have control over billing and costs to carry out tax calculations. After all, the charges can increase or decrease according to the profit registered — or even be zeroed, if the company does not make a profit.
In addition, it is worth knowing that the company that adheres to the real profit is obliged to present the accounting records to the Federal Revenue Service. Thus, if the values are not correct, the company may have problems with the Tax Authorities. There are also cases where membership is mandatory.
Tax calculation on real profit
You learned how to calculate the company’s net income. Based on this result, the taxes to be paid by the company are calculated. In the case of IRPJ, for example, the rate is 15% for businesses with net income of up to R$ 20,000.
For companies with a net income of more than R$ 20,000, 10% is added to the surplus. Still using the previous example, the calculation must be performed as follows:
- 15% on 120 thousand = 18 thousand;
- 10% on 100 thousand = 10 thousand;
- total IRPJ payable = 28 thousand.
Regarding CSLL, the rate is 9% on profit — which would generate a result of R$ 10.8 thousand. It is worth mentioning that, in addition to these two taxes, the company must pay other charges as provided by law.
What are the differences between these terms?
Now that you’ve learned what real profit and revenue are, it’s important to know the difference between these terms. In practice, billing is a performance indicator that is also used to calculate taxes and frame the company in the appropriate legal nature.
Real profit, as you have seen, is a taxation regime in which the net profit indicator is used as a calculation basis for paying taxes. In this context, it is also interesting to differentiate billing and profit as performance indicators .
This is because confusion between both financial indices is very common. Often, the company has satisfactory revenues, which means that it sells its products or services well. However, this does not mean that it makes a profit, as expenses still need to be subtracted.
In this way, billing is all revenue that comes in, while profit is the money that remains in cash after paying costs. Therefore, understanding the difference between these concepts is essential for managing the company’s financial health.
Suppose the company achieved the desired monthly revenue of R$400,000, but with total expenses of R$405,000. In this case, she did not gain and closed the month with a negative balance. Thus, it can be understood that, although its revenue was as expected, it did not make a profit.
Therefore, tracking the indicators individually will help to have a more realistic view of business performance. From this, it is possible to make any adjustments in pricing, seek to reduce expenses and take other measures to increase the profits obtained by the company.
Conclusion
In this article, you could understand the differences between actual profit and revenue, in addition to learning how to calculate each of these indices. Knowing this information is important to understand more about the company’s finances and tax accounting, moving on to more efficient management!
