Gross pay vs Net pay
Put simply, gross pay is everything you receive as payment for a job or work done. It includes the taxes, material costs or any other charges.
Net pay, however, is the amount of payment received after taxes, expenses, and any other fees are withdrawn.
Here is an actual example from the country of Australia.
In Australia, the government has laws that require anyone who receives a payment to put a part of their pay into savings for their retirement. It is called Superannuation. Payments are also subject to Tax.
Let’s say I earned $1000 during a working week.
$1000 is my gross pay.
However, after Tax and the Superannuation is removed, my payment has gone down to only $865.
$865 is my Net pay; this is what I will receive.
The same principles apply for Businesses too. The gross is all of the payments they have received; the net is what remains after all expenses and fees.