Below is a simple way of calculating total expenses from revenue, owner's equity, and income: Net income = End equity - Beginning equity (from the balance sheet) Total Expenses = Net Revenue - Net Income If the result is positive, the revenue is more than expenses, making a profit.

The Business Expense Calculator formulates the total expenses by adding up the values you input for each expense category. Here’s the formula in a simplified version: Total Expenses = Salaries + Rent + Utilities + Loan Payments + Lease Payments + Insurance Premiums + Transportation + Office Supplies + Other Expenses In this formula:

Business expenses are deductions from taxable income. The total of business expenses is subtracted from revenue to arrive at the business' total amount of taxable income. The IRS defines allowable business deductions as costs that are "ordinary and necessary" for the industry in which the business operates.

The Internal Revenue Service allows for three separate methods of calculating costs for tax purposes: average cost; first in, first out (FIFO); and specific identification. Cost basis accounting varies depending on whether the items in question are stocks, bonds, mutual funds, capital equipment, or other assets.