08/09/2026
What Is Taxable Business Income?
Taxable business income generally begins with the revenue your business earns minus the allowable expenses required to operate it.
In this video, we explain the basic formula:
Revenue − Allowable Business Expenses = Taxable Business Income
For example, if a business earns $100,000 and has $60,000 in allowable expenses, it may have approximately $40,000 in business income before additional tax adjustments.
Allowable expenses may include rent, employee wages, insurance, supplies, software, advertising, and professional services. However, personal purchases, owner withdrawals, and certain loan payments are generally not deductible business expenses.
Accurate bookkeeping helps you report all income, support legitimate deductions, understand your profitability, and prepare for your tax obligations.
Follow Stanza Tax Services for practical tax and bookkeeping education for business owners.
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This content is provided for general educational purposes only. Tax treatment may vary depending on your business structure and individual circumstances.