What s the difference between income and profit?

Income refers to the total revenue generated during a specific period, while profit is the amount remaining after all costs have been deducted from sales.Income encompasses all earnings, whether from salaries, sales, services, or asset sales. Although all profits are a form of income, the reverse is not always true.

Is revenue the same as profit?

No, revenue and profit are distinct concepts.Revenue includes all money received during a period, whereas profit is the amount left after subtracting all expenses. Revenue can also include non-traditional income sources like asset sales or insurance settlements.

Proceeds Vs. Profits: What’s The Difference?

Business Terms

Proceeds vs. Profits: Understanding the Key Differences in 2026

In today’s evolving financial landscape, understanding terminology is crucial, especially when it comes to business and finance. While the terms “proceeds” and “profits” both relate to money generated from sales and transactions, they are not interchangeable. This article clarifies the distinctions between these two essential concepts in 2026.

Profits represent the amount earned after deducting the cost of goods sold (COGS). While there are various types of profits, the fundamental principle remains that profit always accounts for the costs associated with goods sold. Conversely, proceeds refer to the total amount of money received from sales without any deductions.

Key Takeaways:

Proceeds	Profits
Proceeds are the total income received from sales.	Profits are the income remaining after subtracting the cost of goods sold.
The term proceeds is less frequently used in modern business contexts, where terms like income or revenue are more common.	Profits are a standard business term, essential for assessing a company’s financial health and profitability.
Proceeds can be categorized into gross and net proceeds.	Profits can be classified into gross profits, net profits, operating profits, and profit margins.
In financial reporting, proceeds may be referred to as the top line.	Profits are commonly known as the bottom line, indicating their position on financial statements.
The term has been used since 1665, derived from Latin and Anglo-French.	The word profit has its origins in the 14th century, stemming from the Latin term profectus.

What Are Proceeds?

Proceeds are defined as the total amount received from a sale or transaction. This can refer to income from various sources, including sales of goods, services, or assets. In financial contexts, proceeds are often categorized into gross proceeds and net proceeds.

While “proceeds” is a more informal term compared to revenue, it still carries specific meanings and applications in business. Here are some key points to consider:

Proceeds are the total amount received. When referred to simply as proceeds, it signifies the entire income from a sale, whether for goods, services, or assets.
Types of proceeds. Proceeds are typically divided into two categories:

Gross proceeds. This includes the entire income from a sale, excluding costs.
Net proceeds. This is the amount remaining after deducting fees, taxes, or other deductions, but typically does not account for the cost of the item sold, particularly in real estate and capital gains.

Always pluralized. The noun “proceeds” is always used in the plural form. The singular form refers to the verb “to proceed,” meaning to move forward.
Historical usage. The term has been in use since 1665, originally meaning “the whole amount,” with more specific definitions evolving over time.
Older verb form. The verb form of the word dates back to the 14th century, derived from the Latin procedere.

What Are Profits?

Profits represent the financial gain after accounting for the costs of goods sold. This calculation is crucial because it determines the net benefit a business derives from its sales activities. “Pure profit” refers to situations where the costs associated with acquiring the item are negligible or absent.

Here are a few essential points about profits:

Cost consideration. Profits always factor in the cost of goods sold. The basic formula for calculating profit is to subtract COGS from total sales revenue.
The bottom line. Profits are often referred to as the “bottom line” because they typically appear at the bottom of financial statements.
Types of profits. Similar to proceeds, profits can be categorized in several ways:

Gross profit. This is the most common interpretation of profit, calculated as sales revenue minus COGS.
Net profit. This includes additional costs beyond COGS, such as discounts or returns.
Operating profit. This further deducts operating expenses, including overhead and depreciation.
Gross profit margin. While not a direct profit measure, this metric shows the percentage of revenue that exceeds COGS, indicating profitability efficiency.

Long-standing usage. The term profit has been used in English since the 14th century and originates from the Latin word profectus.

Proceeds vs. Profits FAQ

What’s the difference between income and profit?

Income refers to the total revenue generated during a specific period, while profit is the amount remaining after all costs have been deducted from sales.

Income encompasses all earnings, whether from salaries, sales, services, or asset sales. Although all profits are a form of income, the reverse is not always true.
Is revenue the same as profit?

No, revenue and profit are distinct concepts. Revenue includes all money received during a period, whereas profit is the amount left after subtracting all expenses. Revenue can also include non-traditional income sources like asset sales or insurance settlements.

Business Terms

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Author

Di Doherty

Di has been a writer for more than half her life. Most of her writing so far has been fiction, and she’s gotten short stories published in online magazines Kzine and Silver Blade, as well as a flash fiction piece in the Bookends review. Di graduated from Mary Baldwin College (now University) with a degree in Psychology and Sociology.

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