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Updated at 2018/07/10

The terms gross sales and taxable gross sales are not the same thing, and the difference can mean a huge difference in the profits of a company. Gross sales is a raw figure that includes all sales that occurred during a particular time frame. The gross sales figure does not take into account numerous categories of expenses such as items returned, the cost of any retail items that are purchased to be resold, taxes, licenses and business fees, rent, electric, payroll or any other costs that a business can expect to incur to operate.

Taxable gross sales is a term that describes the amount of income that a company is liable for paying taxes on. A company is able to take a tax deduction on many, if not all, of the aforementioned expenses, and is not liable to pay taxes on those amounts. What remains after all the liabilities are deducted from the gross sales is the taxable gross income. A company generally attempts to deduct as many individual expenses as it can to make the taxable gross sales as low as possible, thus lowering the company's tax liability. A company may choose to take a standard deduction amount, or individually deduct expenses, and it also chooses whichever figure helps it arrive at the lowest taxable gross income.

These same terms apply to individual taxing liabilities as well. An individual's gross income, minus allowed deductions and expenses, leave the taxable gross income for the individual. This figure is what an individual's tax liability is based on.

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