Key takeaways
- Gross receipts include every sale, fee and payment you receive for your business, whether or not a client sends a Form 1099.
- Sole proprietors report gross receipts on Schedule C line 1, including amounts shown on Forms 1099-NEC and 1099-K.
- Gross income is smaller: it’s gross receipts minus returns and allowances and cost of goods sold, plus other income.
- For 2026, a business with average annual gross receipts of $32 million or less over the prior three years passes the small business gross receipts test.
What are gross receipts?
Gross receipts are everything that came in the door. Every invoice paid, every card sale, every app transfer from a customer and every fee you earned counts, at the full amount, before you take anything out. If a client paid you $5,000 and you spent $800 on materials for the job, your gross receipts from that client are $5,000.
The word “receipts” here doesn’t mean the paper slips you collect when you buy something. It means money received. The paper receipts you keep support the other side of the ledger: your expenses.
Track income and expenses all year in one place with the Manage Receipt app.
Gross receipts typically include:
- Sales of products and services, including cash, card, check and app payments
- Fees, commissions and tips your business earns
- Amounts reported to you on a Form 1099-NEC or 1099-K
- Payments you received but that no form reported
Things that aren’t gross receipts include loans you borrow, money you put into the business yourself and, for most cash-basis businesses, invoices that haven’t been paid yet.
Gross receipts vs gross income vs revenue
These three terms get used as if they’re the same. On a tax return, they aren’t.
| Gross receipts | Gross income (Schedule C) | Revenue | |
|---|---|---|---|
| What it is | All money received from the business | Gross receipts minus returns, allowances and cost of goods sold, plus other income | Accounting term for income from normal operations |
| Costs subtracted? | No | Only returns and COGS | Depends on the report |
| Where you see it | Schedule C line 1 | Schedule C line 7 | Profit and loss statement |
| Used for | IRS size tests and thresholds | Starting point for expenses | Business performance |
An online candle shop takes in $48,000 in sales (gross receipts). It refunds $1,200 for broken orders and spends $14,000 on wax, jars and wicks that went into products sold (cost of goods sold).
Gross income = $48,000 − $1,200 − $14,000 = $32,800. Business expenses such as ads, shipping supplies and software are then subtracted from that to reach net profit.
Where gross receipts are reported
- Sole proprietors and single-member LLCs: Schedule C, line 1. The instructions say to include amounts from Forms 1099-NEC and 1099-K, and to attach a statement if your 1099-NEC totals are higher than line 1.
- Partnerships: Form 1065, line 1a.
- S corporations: Form 1120-S, line 1a.
- C corporations: Form 1120, line 1a.
The IRS matches the 1099s it receives against these lines. If your clients and platforms report more than you do, expect a letter. That’s a strong reason to keep your own income record rather than relying on forms.
Why gross receipts matter: thresholds
Many tax rules switch on or off based on gross receipts rather than profit:
- Small business taxpayer test: for tax years beginning in 2026, average annual gross receipts of $32 million or less over the prior three years let a business use simpler rules, such as the cash method and relaxed inventory accounting (see cash vs accrual accounting).
- Form 1099-K reporting: payment platforms report your gross payments once they exceed $20,000 and 200 transactions in a year, before fees and refunds.
- State and local rules: some states and cities levy gross receipts taxes or set filing and license requirements based on gross receipts.
- Loans and programs: lenders and some government programs ask for gross receipts to size a business.
Sales tax you collect from customers needs care. Depending on your state and how you record it, it may be included in gross receipts and then deducted, or kept out entirely. Check your state’s rules and be consistent from year to year.
Keep the expense side as clear as the income side
Gross receipts are only half the picture; what you keep depends on the costs you can prove. Manage Receipt scans and categorizes every purchase receipt, so the expenses you subtract from gross receipts on Schedule C are complete and backed by documents. Store your 1099s in Doc Wallet to check them against your own income record.
Explore AI Tax ReportsFrequently asked questions
Are gross receipts the same as revenue?
Often close, but not always. Gross receipts are every dollar your business received before any deductions. Revenue is an accounting term that may exclude some items or be measured on an accrual basis. On a tax return, use the IRS definition and report gross receipts on the line the form asks for.
What counts as gross receipts?
All amounts your business receives from sales and services: cash, card, check and app payments, fees, commissions and tips, including income reported on a 1099 and income no form reported. Loans, owner contributions and, for cash-basis businesses, unpaid invoices are generally not gross receipts.
Are gross receipts the same as gross income?
No. On Schedule C, gross income is gross receipts minus returns and allowances and cost of goods sold, plus other business income. A service business with no inventory and no refunds may have the same number for both, but a product business usually won’t.
Do I report gross receipts if I didn’t get a 1099?
Yes. Every payment your business received belongs in gross receipts, with or without a form. A missing 1099 doesn’t make income tax-free, and the IRS may still learn about it from other records. Keep invoices and deposit records to support the total.
Are refunds and returns subtracted from gross receipts?
Not on line 1. You report full gross receipts first, then subtract returns and allowances on Schedule C line 2. Cost of goods sold comes off next, giving gross profit. Keeping refunds as a separate figure makes it easier to match your total against the 1099-K your payment platform sends.