Turnover can provide useful information about your business and its finances. You may also need to provide your turnover if you're applying for a small business grant or loan, looking for funding or filing a tax return. Pretty much every business – large and small – will need to provide their turnover at some point or another.įor instance, if you start building a business insurance quote with Superscript, we’ll ask you for your annual turnover so we can work out the right level of cover for you. ![]() Gross profit is your total sales minus the cost of goods or services sold (COGS), while net profit is sales minus COGS and expenses such as taxes and wages. While both turnover and profit look at your total sales, profit also includes some important deductions that aren’t considered when measuring turnover. It’s important to note that turnover isn’t the same as profit. What’s the difference between turnover and profit? If you're VAT-registered, make sure you exclude VAT when calculating turnover, as this sales tax technically belongs to HMRC rather than your business. If you provide services, such as consulting or labour, your turnover will be the total that you charged for these services. If you sell products, your turnover will be the total sales value of the products you've sold. How do you calculate turnover of a company?Ĭalculating your turnover should be super easy as long as you've kept an accurate record of your sales. Employee turnover refers to the number of employees that leave the company over a given time period. One of the most common alternative uses is employee turnover, which is also known as staff turnover or labour turnover. The word turnover is typically used in a financial context, but you might also hear it used in other ways. And because it only considers income generated through your main trading activities, turnover doesn't take into account things like bank interest or money received from the sale of assets. Turnover is calculated over a specific period of time, usually a quarter or financial year. Put simply, turnover is the total amount of money your business receives from the sale of goods and services – minus discounts and VAT. The amounts derived from the provision of goods and services falling within the company's ordinary activities, after deduction of (a) trade discounts (b) value added tax, and (c) any other taxes based on the amounts so derived. The Companies Act 2006 defines turnover as: This back-to-basics guide will help you understand what turnover is, when you might use it and how to calculate it. ![]() Whether you're a business owner, a freelancer or self-employed, turnover is one of the most important financial figures to get to grips with.
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