Gross income is an important concept to understand and measure finances for both individuals and businesses. For individuals, gross income is the total amount of money earned from wages and salary, and from other sources of income such as pensions, interest, dividends, and rental income. It’s the sum of all of these sources of income before any deductions or taxes are taken out. It’s important to follow up on the sources of your gross income, since these are typically what will be reported on your income tax return.

When deductions, exemptions and other factors are taken into account, the adjusted gross income (AGI) is calculated, which is then used to calculate an individual’s taxable income. This figure is used to calculate an individual’s income tax rate and ultimately the amount of taxes they owe. Additionally, individuals may be required to report gross earnings when trying to secure a loan or investment.

Businesses use gross income instead of net income to gauge product-specific performance. Gross income for a business is the total amount of revenue collected minus the cost of goods sold. In other words, it does not take into account operating costs and expenses such as payroll, taxes and other overhead. Businesses use the gross income to measure the quality of products and services, and how the company is performing overall.

Gross income is important to consider when understanding and analyzing personal or business finances. By tracking and understanding the concept of gross income, it is possible to gain keen insights into personal finances or the success of a product or business.