Business Definition: Revenue/Gross Receipts/Sales

Textbook Definition: A term that refers to any operating revenues that a company earns through its business activities, such as selling goods, services, products, etc.

Definition You Need to Know: Sales is money paid to you, for a good, a product, or a service.

And those sales are subject to income tax, and likely self-employment tax (see each entity's section in Foundational Business Information for how each entity’s income is taxed).

The only way to reduce your taxable revenue is by applying deductions against those sales. That reduces your overall business income, which is what you’re taxed on. We’ll talk more about how that works and what does and doesn’t apply as a business expense in the Cost of Goods Sold and Overhead expenses section down below.

It’s also important to understand which common transactions aren't considered sales that are taxable to you.

When you put money into the business either to start the bank account or to infuse some money to pay your bills, that’s just an owner contribution, not income.
A loan you receive from the bank, a friend, or your grandmother is also not a taxable sale. It’s just a debt you owe someone, and it sits on your balance sheet until you pay it all back. It’s not income when it comes in, and it’s not an expense when you pay it back.

The first sale you make as a business owner usually falls into one of two categories.

This can be the first transaction for an unassuming, budding entrepreneur, who offers their hobby or passion skills to someone who then wants to compensate them in return. Once that thrill happens, it’s usually game on and before they know it, they’re bringing on subcontractors to help them as they scale.

Or it can be the hardest transaction a start-up business can face in its life. Getting the confirmation from the first customer that you have a skill, product, or service that someone is willing to pay money for can be challenging to obtain.

Regardless of how it happened, get that first sale can be both incredibly rewarding and life-changing. And whether you like it or not, as soon as you collect a dollar of revenue/sales/gross receipts, whatever you want to call it, you’re a business owner.

Where are they on my financials? Revenue/Gross Receipts/Sales show up on the Profit and Loss/Income Statement.