Gross revenue

Gross revenue - otherwise known as pre-tax income, is income that includes advances on income tax, contributions of any kind and other deductions. The influence of the state on the income of other entities through the imposition of taxes results in the separation of net and gross income (M. Dackehag A. Hansson, 2012, pp.5-7).

It is a basic quantity and economic category, which is a positive effect of production factors applied in the course of management: labor, financial and material capital and land. The creation of income is real thanks to human entrepreneurship and an appropriate fusion of production factors. It is also an economic surplus of the farming population, constituting the basis for satisfying personal and collective needs, current objectives, i.e. consumption objectives and development objectives, i.e. investment objectives (M. Dackehag A. Hansson, 2012, pp.5-7). Income takes the form of money, although its content is not money, services, and goods that can be purchased by entities of the economic organism that have purchasing funds. In the tax system, gross income is the difference between the income earned at a given time and the costs earned on that income (M. Dackehag A. Hansson, 2012, pp.5-7).

Components of gross revenue

Gross income means the wage we have received, as well as any contributions, income tax advances, and other deductions. Therefore, the employee should not suggest the amount included in the contract, because it will be higher than the amount of money received at his disposal (D. Romero-Avila, Strauch R., 2008,pp.172-191).

It is worth noting that some contributions are paid from the employee's salary (gross income is reduced by contributions paid on behalf of the employee), and some are paid by the entrepreneur. In the case of an employment contract, the employer deducts the amount of the payment from the gross revenue (F. Widmalm, 2001, pp.199-201):

• social insurance contributions (pension, disability, sickness),
• health insurance contributions,
• income tax advances.

It should be remembered that these contributions are not paid in full by the employee, and therefore they are not deducted in full from his or her remuneration - some part is paid by the employer (Y. Lee, R. Gordon, 2005, pp.1027). In contrast to the gross revenue, the total of these charges is referred to as the gross-gross revenue or the total cost to the employer. Despite the formal division into the part paid by the employer and the employee, the settlement of all contributions and tax advances is carried out by the employer (Å. Hansson, K. Olofsdotter, 2011,p.11-12). The total gross wage is the tax-deductible cost of the employer, which reduces the employer's income tax liability. The cost as a real cost to the employer is consequently lower than the gross revenue.

Gross National Income

Gross National Income is the sum of the value of GDP (Gross Domestic Product) and the value of foreign net income in a specified period. The quotation of net foreign income is the difference between the gross value of receivables of domestic units from foreign entities and the gross value of liabilities of domestic units from foreign entities (J. Gruber, E. Saez, 2002, pp.11-13 ). nd the costs earned on that income (M. Dackehag A. Hansson, 2012, pp.5-7).

Quality of the income

This is an assessment of the realism of the confirmed income by the enterprise and its analogies with the economic reality of the economic unit of the enterprise. It is a multilateral evaluation, which is carried out from the financial and accounting point of view, containing quantitative and qualitative elements.

The qualitative components are not measured. Quantitative elements are measured and calculated as follows (W.M. Gentry, & R.G. Hubbard, 2000, pp.283-287): "reported net income plus non-nerealystical ground discouting minus non-eralistrative income assets is equal to neto Adjusted Revenue."

Although there is no 'evident' amount of income, the realistic adjusted income, as calculated in the valuation recital for each class of items, more accurately reflects the results of the enterprise's operating activities than its documented net income (W.M. Gentry, R.G. Hubbard, 2000, pp.283-287).

Tax on income

Income tax depends on the organizational and legal form of business activity. Therefore, the future taxpayer may decide for himself how he will settle his accounts with the tax office (F. Widmalm, 2001, pp.217-219). Types of taxation of the company's income depend strictly on the type, subject and size of the business. It is also affected by the amount of income earned by the company and, to some extent, an individual decision of the taxpayer. As a rule, Polish law distinguishes between two types of income tax - personal income tax and corporate income tax (D. Romero-Avila & Strauch R., 2008,pp.190-191).

Gross revenue — recommended articles

Effective gross income — Total income — Income from operations — Costs and expenses — Cost structure — Direct tax — Net gain — Inventory analysis — Rate base

References

• Bankman J., Griffith T.D, Pratt K., (2008), Federal Income Tax: Examples and Explanations
• Ernst & Young Tax Guide 2018, (2017), Ernst Young LLP
• Dackehag M.Hansson A. (2012), Taxation of Income and Economic Growth: An Empirical Analysis of 25 Rich OECD Countries "6 Department of Economics School of Economics and Management", 5-7
• Gentry W.M., R.G. Hubbard (2000), Tax policy and entrepreneurial entry, "American Economic Review", 283-287
• Gruber J., E. Saez (2002), The elasticity of taxable income: Evidence and implications, "Journal of Public Economics", 11-13
• Hansson Å., K. Olofsdotter (2011), Labor Taxation and FDI decisions in the European Union, "Department of Economics Lund University", 11-12
• Lee Y., R. Gordon (2005), Tax structure and economic growth, "Journal of Public Economics", 1027
• Romero-Avila D., R. Strauch (2008), Public finance and long-term growth in Europe:Evidence from a panel data analysis, "European Journal of Political Economy", 172-191
• Widmalm F. (2001), Tax structure and growth: Are some taxes better than others?, "Public Choice", 217-219
• Whittenburg G.E, Altus-Buller M., Gill S., (2014) Income Tax Fundamentals 2015

Author: Dominika Pasek