What is revenue, and how do you calculate it?
The first number anyone asks a business owner for, and one of the most often misunderstood.
Revenue, also called sales or turnover, is the total of a business's sales of goods and services over a given period. Revenue that includes recoverable taxes is called gross; revenue that excludes them is net, which is what the income statement shows unless stated otherwise. Revenue measures activity, not profit, since no expenses are deducted.
In short
- Revenue = sales of goods + services billed, for a defined period.
- Gross includes recoverable taxes; net excludes them.
- The income statement shows net revenue unless it says otherwise.
- High revenue can hide a loss, because costs aren't subtracted.
How is revenue defined?
The OQLF's accounting vocabulary defines the French chiffre d'affaires as the total of a business's sales and services over a given period, with sales, sales revenue, revenues and (in the U.K.) turnover as English equivalents [1].
The entry makes one distinction worth remembering: gross revenue includes recoverable taxes, net revenue doesn't, and the figure shown on the income statement is net unless otherwise indicated [1]. For a service business, "services" matters: billed labour counts just as much as parts sold.
How do you calculate a month's revenue when invoices include tax?
Revenue, profit, cash received: what's the difference?
| Concept | What it measures | Example (October above) |
|---|---|---|
| Net revenue | Sales and services billed, tax excluded | $28,000 |
| Amount billed with tax | What customers pay, taxes included | $32,193 |
| Cash received | Money actually in the bank that month | Could be $24,000 if invoices are still unpaid |
| Profit | Revenue minus all expenses | Could be negative despite strong revenue |
Cash and profit amounts are hypothetical and only illustrate the gap.
Why is revenue used to size up businesses?
Revenue is a size criterion. An accounting-dictionary entry describes a small or medium-sized enterprise as one considered small because of its revenue, total assets or number of employees, among other things [3]. See our entry on SMEs.
Quebec's private-sector privacy act uses it too: the maximum monetary administrative penalty for a business is $10,000,000 or 2% of worldwide turnover for the preceding fiscal year, whichever is greater [4]. See Law 25.
How should you track revenue?
Revenue is a lagging indicator: it confirms what already happened. On a dashboard, split it by service and compare it with the same month last year, especially in seasonal trades. Divided by number of customers, it leads to customer lifetime value; divided by hours worked, to revenue per hour. Defined clearly, it makes a solid key performance indicator.
What mistakes do people make with revenue?
- Adding up tax-included invoices and calling the total revenue.
- Comparing July with January at an air-conditioning company without accounting for the season.
- Confusing invoices issued with money received: revenue goes up while the bank balance goes down.
- Setting a revenue target without looking at margin: selling more hours at a loss doesn't help.
- Counting deposits for work not yet done in the same total.
Does Pilotiko calculate your revenue?
Pilotiko produces internal reports on bookings, revenue and workload from the data you manage in it, and shows them in its virtual office. It is not accounting software: your official income statement still comes from your books. Pilotiko doesn't promise any increase in revenue.
Frequently asked questions
Does revenue include sales tax?
Net revenue excludes recoverable taxes; gross revenue includes them. Unless stated otherwise, the income statement shows net revenue, so GST and QST collected in Quebec are left out of it.
Is revenue the same as income?
In everyday small-business talk, people often say income or sales when they mean revenue. Profit, or net income, is different: it's what remains after expenses.
How do I calculate annual revenue?
Add up all sales and services invoiced over the fiscal year, excluding taxes, to get net revenue. For a service company that includes billed labour, parts sold and any travel charges invoiced.
Does high revenue mean a business is profitable?
No. Revenue doesn't subtract any expenses. A company can grow revenue while losing money if its costs rise faster than its sales.
What is revenue called in French?
Chiffre d'affaires, abbreviated CA. Quebec businesses also commonly say revenus. The OQLF lists sales, sales revenue, revenues and turnover as English equivalents.
Sources
- Office québécois de la langue française (Vitrine linguistique), chiffre d'affaires (GDT) (accessed on October 15, 2026).
- Canada Revenue Agency, GST/HST calculator (and rates) (accessed on October 15, 2026).
- Office québécois de la langue française (Vitrine linguistique), fiche de l'ICCA, petite ou moyenne entreprise (GDT, Dictionnaire de la comptabilité et de la gestion financière) (accessed on October 15, 2026).
- LégisQuébec, Act respecting the protection of personal information in the private sector (CQLR, c. P-39.1) (accessed on October 15, 2026).
Read next
What is a KPI (key performance indicator)?
What a KPI is, how to derive one from a business goal, formulas for a service company, a worked month of numbers and the traps to avoid when picking them.
What is a management dashboard?
What a management dashboard is, leading versus lagging indicators, how it differs from a report, a snow-removal example and mistakes that make it useless.
SME: what is a small and medium-sized enterprise?
What counts as an SME in Canada and Quebec: federal and Quebec definitions compared, the December 2024 Quebec figures and the classification mistakes to avoid.
Customer lifetime value: what is a customer worth over time?
Customer lifetime value explained: the simple formula, the margin-based version, a heat-pump maintenance example and what Google Analytics can predict.