Financial Overview Gross vs Net Sales on SkyTab POS

Description: Learn about the difference between Gross Sales and Net Sales below.

---

Gross vs. Net Sales

Over the years, various POS systems and cash registers have used countless formulas for calculating Gross Sales and Net Sales. The most common misconception is that Gross Sales include sales tax. If you are operating with that definition of Gross Sales, then your understanding of SkyTab reports will not match what’s displayed on those reports.

Explanation

SkyTab uses the standard formula as accepted by Generally Accepted Accounting Principles (GAAP) standards, which are those used by all CPAs and Accountants (refer to this link for a detailed description and explanation). In short, many POS dealers and merchants may be used to other POS systems or cash registers, where Gross is considered to be Net+Tax, and that’s not the accepted definition. Tax is for the government. It’s not retained by you and has nothing to do with revenues or profit and loss, therefore should not be considered a part of Net or Gross.

On SkyTab, in accordance with accepted accounting definitions:

Gross = The total amount of all items added to tickets and paid before taxes and before discounts.

Net = The total amount of all items added to tickets and paid before taxes and after discounts.

So, for example, you sold one hamburger for $10.00 with no discounts. The Financial Overview report would be:
● GROSS: $10.00
● NET: $10.00
● DISCOUNTS: $0.00
Notice in the above example, Gross and Net are the same $10.00 because we had no discounts.

Let's say, for this example, you sold one hamburger for $10.00, but there was a $1.00 discount on that burger. The Financial Overview report would be:
● GROSS: $10.00
● NET: $9.00
● DISCOUNTS: $1.00
where NET of $9.00 reflects the $1.00 discount off the $10.00 burger GROSS.

If you ever wonder, “how can Gross and Net can be the same on this report for yesterday” look at the discounts, and you will almost certainly see that it’s $0.00.

What are Sales?

Sales are sales, right? While on the surface, the short answer is Sales are sales, but the long answer is there are Gross Sales and Net Sales. So what’s the difference and why does it matter?

• Gross sales are the ring at the register before discounts, not including sales tax. Sales tax is what the government gives us to collect their money and penalize us if we borrow it and pay it late. The Sales Tax collected is not a sale. 
• Net sales are the ring at the register after discounts have been removed, not including Sales Tax.