What does gross receipts include?

Gross receipts represent the total income received by a business before any expenses or deductions are subtracted. This total includes not only the cash received from sales but also the fair market value of goods and services exchanged. This means that if a business barters its goods or services, the fair market value of what was exchanged should be included in gross receipts.

This is important for accurately reporting income, as it reflects the true economic benefit received by the business. In contrast, cash received from sales alone would not provide a complete picture of the business's income if other forms of income are also part of the transactions. For tax purposes, reporting gross receipts in this comprehensive manner ensures that a business meets its tax obligations appropriately.