Net profit is what's left after all costs are deducted from revenue, the true bottom line. This guide explains how it differs from gross profit.
Published July 2026 · Updated July 2026
Net profit is what remains after every cost, cost of sales and overheads like rent, wages, software and marketing, is subtracted from revenue. It is the real measure of whether the business made money.
Net profit is what's left for the owners, and it's the starting point for tax. Watching net margin (net profit as a percentage of revenue) over time reveals whether growth is actually translating into money kept.
No. Net profit can be high while cash is tight, for example if customers haven't paid yet. Watch both.
It varies hugely by industry, so compare with similar businesses and track your own trend.
Source: Investopedia ↗. This glossary is written for small business owners, so definitions are simplified. Tax rates and thresholds reflect 2026/27 UK rules and change over time. Berified does not provide accounting, tax or legal advice; always check the source or a qualified adviser.