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Gross Profit so high, yet seems net profit is low?

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  • 12-11-2018 8:28pm
    #1
    dollydoo30
    Registered Users Posts: 12 ✭


    So husband has a small construction company, basically himself and 3 employees. Just seen his Gross profit for the year was 200k , yet net is 74k. Where the hell are we going wrong. He is a sole trader, so I understand he is going to be taxed a lot. We are going to go down the ltd company route.

    Please tell me is this normal ?


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    #2
    someyoke
    Registered Users Posts: 94 ✭✭someyoke


    If employees paid salary that's probably majority of the difference. Don't think he's going wrong anywhere with a net profit of 74k in a 4 person operation!


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    #3
    Graniteville
    Closed Accounts Posts: 292 ✭✭Graniteville


    My gross last year was over 800k.

    My net was well under 100k


    Talk to an accountant who can explain it so that it allays your concerns.


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    #4
    jimmii
    Registered Users Posts: 14,810 ✭✭✭✭jimmii


    Net 74 is pretty good given he has employees.


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    #5
    antoinolachtnai
    Registered Users Posts: 9,793 ✭✭✭antoinolachtnai


    The difference is probably mostly the wages for the three employees. This is (typically, not always) counted into the calculation of the net but not the gross profit. There are other costs in there, like insurance and maybe payments on van.

    At the end of the day, the only way to make more net profit is probably going to be to do more, more profitable jobs.

    It really is worth your while taking your time to talk to the accountant and listen carefully to his explanation of the accounts. You need to put a good bit of work into it to really understand it.

    Being a limited company or not isn't going to make that much difference to the fundamental story of the business.


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