.jpg)
If you have a business or want to set up your own, you should know that turnover is extremely important for determining profit and calculating taxes. Although it is essentially a financial indicator that may seem easy to manage, it must be calculated carefully to avoid any confusion. Here's all the information you should know about turnover.
What does "turnover" mean?
Turnover is a financial indicator composed of the receipts made by the firm from
activities carried out. In essence, it marks the level of output delivered and
turned into money.
The point to remember is that:
- A company's turnover refers to the company's income, not its bank balance;
- Financial income is not included in turnover;
- Turnover does not reflect a company's success;
- Turnover can be: total, average, marginal and critical (minimum).
Total turnover - total revenue from the sale of goods/services (in this case
turnover must be higher than the total volume of costs).
Average turnover - the average revenue from the sale of goods/services.
Marginal turnover - reflects the change in an income (increase/decrease), obtained from
the sale of goods/services.
Critical (minimum) turnover - the revenue a company earns from the sale of
goods/services and covering fixed and variable costs, as well as the threshold above which the
make profits.
How is turnover calculated?
Total turnover = income from core activities + income from other activities
Essentially, the value of turnover is obtained by adding up the revenues, and these can be
represented by:
- Income from the sale of finished, residual or semi-finished products;
- Income from services rendered;
- Income from studies and research;
- Income from royalties, management leases and rents;
- Income from the sale of goods;
- Income from other activities.
What does not count are:
- VAT invoiced;
- Trade discounts provided to customers;
- Subsidies to pay staff;
- Investment grants;
- Dividend income;
- Interest;
- Financial / extraordinary income;
- Positive exchange rate differences.
What is the difference between turnover and profit?
Turnover reflects the total amount of sales made by a company in a given
period of time. Profit, on the other hand, is the amount left over from the decrease
expenses (salaries, rents, taxes, costs of new materials or equipment, taxes, etc.) out of income.
Application of VAT and turnover
Turnover is taxed differently depending on a company's income and the number of
employees, thus:
- Companie cu o cifră de afaceri < 1 mil euro – impozit anual cuprins între 1% și 3%
- Company with a turnover > 1 mil euro - 16% corporate income tax
- Company with > 1 employee - 1% annual tax
- Company with no employees - 3% annual tax
Do all these indicators give you a headache? Want to find them all in one place?
Try the Banqup platform, we'll help you and your accountant get all the
figures ready before the end of the year
%20(1).jpg)
%20(1).jpg)
.jpg)
