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What is the difference between Gross Profit before Tax and Net Profit before Tax?

fodigie
by fodigie 20 February 2012  |  Comments 2 comments  |  Love Love  0 loves

I am a sole trader and have applied for a mortgage and have been asked for this information for the last 3 years. Last year, I had turnover of £32,000 and Expenses of £8,000 leaving me with a profit of £24,000. Please clarrify?

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Comments (2)

  • MikeGG1
    Love rating 879
    MikeGG1 posted

    The difference is overheads and interest on business borrowings.

    Mike

    Posted on 21 February 2012 | Love Love  0 loves Report
  • Lovelyjoolz
    Love rating 7
    Lovelyjoolz posted

    Gross Profit is your sales (Turnover) less your direct costs of sale. Net profit is your gross profit less your administrative costs and overheads.

    For example, if you were a widget maker and you made widgets out of aluminium. Your Gross Profit would be your turnover less the cost of the aluminium.

    Your net profit would then be the Gross Profit less your rent, rates, utilities, wages, stationery etc etc etc.

    Hope this helps.

    Posted on 24 February 2012 | Love Love  0 loves Report

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