Earned Income

  

Categories: Tax, Company Valuation

Earned income refers to what you earn from employment (including tips and commissions). The Tax Man is really interested in it, since this is the money you'll be paying income tax on.

Earned Income is "active income," which usually carries the ordinary income higher tax rates; passive income is dough from long-term investment gains realizations and qualified dividends.

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Finance: What is an Income Statement?51 Views

00:03

what is an income statement I made money yeah that's an income statement and it's [Man jumping up as money rains down]

00:11

actually not all that far off from what accountants lawyers bankers and other

00:14

forms of humans who count beans call an income statement well cleverly named an

00:19

income statement is a statement of income it just states how you made your [Two guys stood at a food stall]

00:24

income your french fries smoothie stand like who would have ever thought that

00:29

would taste good sold a million units at five bucks each to give you five million

00:35

dollars in revenue last year well you had some cost that went with

00:39

those sales though you had to buy cups the french fries and other unnamed [Costs of french fries smoothie stand]

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ingredients and you had to pay 2 some ones to stand there and convince people

00:48

to drink liquefied potatoes then you had to rent space for your stand and buy

00:53

insurance and advertise and that abnoxious mascot in the potato costume

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you had five million in revenue and three million in expenses and this [revenue of french fries smoothie stand]

01:03

number right here that's your pre-tax or operating profit

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you then take away your 30% in taxes which on two million dollars is 600

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grand and blammo that 1.4 million is your net income or [net income figure for business]

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after-tax profit this whole thing right here is your income statement and yeah [income statement for french fries smoothie business]

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it can and does get way way more complex than this but let's start with starch

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smoothies and work our way up [man at french fry stand thinking about selling sushi shakes]

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