What are the different types of Income? Define them elaborately.

There are many types of income I found in business areas. Multi types of income such as

1.      Income

2.      Business income

3.      Basic Income

4.      Gross Income

5.      Earned Income or linear Income

6.      Residual Income

7.      Passive Income

8.      Leveraged Income

9.      Net Income (NI)

Now elaborately I am going to discuss the above mentioned different types of income which are as under:

1.      Income Definition: In business income refers to a company’s residual revenues after all expenses and taxes have already been paid. It else’s known as earnings. On the other hand, income means economic wealth that is created in exchange of individual performance or through investing capital. Income may consume in a day to day business expenses.   

2.      Business Income Definition: The term “Business income” refers financial gain during a stipulated period of time from a business organization. If income is received from a business operations is called business income. Here it’s notable that business income is taxable. For instances, rental income to the business, sales or turnovers, interest from banks accounts of business organizations etc.

3.      Basic Income Definition: Basic income or Guaranteed Annual Income is meant an income totally granted to all on an individual basis without means test or work obligation. In various European countries there are three ways such as

i)                    it is paid irrespective of any income from other sources

ii)                   it is being paid to persons rather than households

iii)                 It is paid except requiring the performance of any work or the eagerness to accept a work if offered.

4.      Gross Income Definition: Generally gross income denotes a person’s total personal income before taking any taxes or deductions in to an account or a company’s revenue minus cost of goods sold. Also called “Gross profit” or “Gross margin”. On the other hand total revenue received before any deductions or allowances such as taxes, house rents, cost of goods sold etc.

5.      Earned Income Definition: Earned Income also referred as linear Income. There is a direct correlation between your income and time. Say, you are trading your time only for dollars, if you work 10 hours you will paid for 10 hours, if you don’t work , you won’t paid.

6.      Residual Income Definition: If you gain something by doing accurately and then reaping the financial profits over and over further except any repeat effort at your end. For instances, a percentage of earlier sold products that re occurring income i.e. insurance, a monthly membership service or product, royalties, real estate rental income and monthly or weekly subscriptions. Else legitimate network marketing is a tested process that may used to construct a concrete residual income.  

7.      Passive Income Definition: Passive income is a type of income that not required your time in order to sustain. For instance, High interest bearing accounts, Investments, SEO, Virtual marketing, legitimate network marketing, selling via automated method, product development, any affiliate program administered by a third part like commission Junction, ClickBank, or others. Passive and residual income very often used interchangeably.

8.      Leveraged Income Definition: Leveraged income is such type of income which you gain in conjunction with the combined efforts of others. For instances, down line builder income, or say if your employees have an own business and recruit other employees in order to create income towards your base line, A team, sub affiliates in your affiliate programs etc. J Paul Getty said, “I will rather earn 1% of 100 people’s attempt than from 100% of my own attempt”.

9.      Net Income (NI) Definition: Net income is calculate by taking revenues and adjusting for the cost of doing business, interest, taxes, VAT, depreciation, and other expenses etc. Net income (NI) is called a company’s total earnings or profit. Net income (NI) we can see in a company’s income statement or profit or loss account or statement of revenues and expenditures etc. Net income is very much important to appraise on how profitable was the company during a period of time. This appraise is also may used to compute EPS (Earning per share). For instance, say your gross income is BDT. 6,000 and where total deductions shows BDT.1,000. In that connection your taxable income is BDT. 5,000. If you have BDT.1,000 as income tax which is subtracted then the residual BDT.4,000 is your (NI) net income.