How to calculate profit before tax

Most companies and people like to make a profit--that is, they prefer to make more money than they spend. The higher the profit, the better, in most cases. But higher profits may also mean higher taxes. Taxes are usually assessed based on a percentage of income and are taken out after deducting operating expenses from gross profit.

Go to the bottom of the income statement to find the net income value. Let's say this number is £65,000.

Look for a value for taxes just above net income. This line item is usually referred to as "taxes" or "income taxes" or "tax expense." Let's say the value for taxes is £16,250.

Add taxes back to net income to calculate pretax profit. For example, £65,000 + £16,250 = £81,250.

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Things Needed

  • Calculator or spreadsheet

About the Author

Working as a full-time freelance writer/editor for the past two years, Bradley James Bryant has over 1500 publications on eHow, and other sites. She has worked for JPMorganChase, SunTrust Investment Bank, Intel Corporation and Harvard University. Bryant has a Master of Business Administration with a concentration in finance from Florida A&M University.

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