Profit
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A commercial entity's profit - often called 'the bottom line' after its position on a balance sheet - is the amount of its yearly revenue remaining after accounting for all annual expenses. Profit is also called 'net revenue', 'net earnings' or 'net income'; or loss if the bottom line is negative. Different entities' profits are taxed differently depending on how their profit-making is defined.
Taxed or not?
For-profit organizations are those like corporations, businesses and professional firms whose sole purpose is considered to be the generation of profit through commercial transactions. These profits are subject to federal taxes, though at a rate lower than the individual income-tax rate. However, the Internal Revenue Service (IRS) considers some groups, like clubs, political groups and charitable organisations, as 'non-profit' organisations because their main purpose is something other than making a profit, even if they wind up the year with one.[1]
References
- ↑ Nonprofit corporation. NOLO. Retrieved on August 14, 2008.
