Answer:
Compensation income is the income that comes from an employer-employee relationship. Salaries, wages, emoluments, and honoraria, commissions, taxable bonuses, and fringe benefits all fall into this category.
Gross income is the total amount you earn and net income is your actual business profit after expenses and allowable deductions are taken out. However, because gross income is used to calculate net income.
To calculate net income for a business, start with a company's total revenue. From this figure, subtract the business's expenses and operating costs to calculate the business's earnings before tax. Deduct tax from this amount to find the N.
The formula for calculating net income is:
Revenue – Cost of Goods Sold – Expenses = Net Income
