Gross receipts is total revenue before any deductions — the full amount received from sales, services, and other business activities. It is the tax basis for several state and local taxes and the starting point for most business revenue analysis.
Gross receipts represents the full, unadjusted inflow of revenue from all business activities before any expenses, returns, allowances, or cost of goods sold are deducted. It is the starting line on a business's income statement — everything flows from gross receipts downward to net income. For federal income tax purposes, the IRS distinguishes gross receipts from gross income and gross profit. Gross receipts is the total before returns and allowances; subtract returns to get net receipts; subtract cost of goods sold to get gross profit. The distinction matters for small business size tests: SBA size standards (https://www.sba.gov/document/support-table-small-business-size-standards) for some industries are set as dollar limits on average annual gross receipts. State and local taxation often uses gross receipts directly. Several states — Ohio (Commercial Activity Tax), Washington (B&O Tax), Nevada, and others — impose gross receipts taxes rather than income taxes. These taxes apply to total revenue regardless of profitability — a business with $1M in gross receipts but a net loss still owes the gross receipts tax in Washington. For lenders, gross receipts serves as the top-line verification of business scale — typically confirmed through bank statements (deposit volume) and tax returns (Line 1 on Schedule C, Form 1120-S, or Form 1065). MCA and alternative lenders frequently use gross receipts to size advances: a $100K/month gross receipts business might qualify for a $50–80K MCA based on monthly deposit volume.
Gross receipts is total before any deductions. Net revenue subtracts returns, allowances, and discounts from gross receipts. For services businesses with few returns, gross receipts ≈ net revenue. For retail or e-commerce with return rates of 10–30%, the difference can be significant.
SBA size standards for service industries use average annual gross receipts (3-year average) as the small business size test. For example, accounting firms under $25M gross receipts qualify as small; construction companies may have limits of $15–$45M depending on NAICS code. Check current limits at https://www.sba.gov/document/support-table-small-business-size-standards.
Bank deposits approximate gross receipts — they represent cash collected from customers flowing into the business bank account. Lenders use deposit volume as a proxy for gross receipts when tax returns aren't yet available (e.g., for a business in the current tax year). Note that deposits can include non-revenue items (owner injections, loan proceeds, transfers) — lenders normalize for these.