Profit Vs Proceeds, Meaning And How To Use Each One

When we talk about finances, some terms can be very confusing. Between income and earnings, several steps must be taken into account. In this sense, what is the difference between proceeds and profit?

Proceeds are the amount of income that comes in a business or company, and profits are the earnings that the company’s revenue leaves you. People use both terms synonymously. The difference is that expenses are subtracted from income in profits, so profits are calculated from the proceeds.

This article will discuss the meaning of profit and proceeds, their synonyms, and some examples of the correct use of the terms.

Definition Of Profit

Profit can be either a noun or a verb.

As a noun, profit is the total income or cash flow minus expenses. Also, it can be defined as the benefit, usually monetary, that an organization or an individual receives as payment for their products and services at a set price.

Some examples using the word as a noun are,

• I received an excellent profit on the rent of the summer house last year.
• Land for farming is too expensive, and crops take too long to grow. Besides, you have to pay the farmers to be attentive to the products daily. If we consider everything, we would not see the profits of this land in ten years.
• Yesterday I was in a meeting to start a new business with several people I know. The explanation was strange, and the presentation was short. I couldn’t see the profit I could make from it, so I thanked them for their time and declined the offer.
• I have a candy store and a craft store. The earnings of both leave me an annual profit of half a million dollars. So I quit my job and, together with my husband, we run both stores.

As a verb, profit means to benefit or be of benefit to someone or something.

Some examples using profit as a verb are,

• The company profited enormously from the reputational crisis of its competitors and improved its image to be better positioned in the market.
• I want to start reading the news to profit from the information. Yesterday I was in classes at my university, and I could not participate because I am not up to date on the news.
• My city profits from tourism. The highest income comes from artificial beaches and amusement parks. Also, there are more job opportunities in this sector. I could say that our economy has never been better.
• Companies profit enormously from social media. Promotions and advertisements help sales if they are well used.

Definition Of Proceeds

As a noun, proceeds mean a total of something that was paid for. Also, it can be the total cost received from a company after deducting charges or expenses owed.

Using the concept as a noun, we can see the following examples:

• Yesterday I had a garage sale, and I sold all my old clothes. The proceeds were outstanding, but I must subtract the electricity costs and a snack I gave to the buyers.
• I have to calculate the proceeds of my small business. Yesterday was payday, and I don’t know how much money is really mine and how much I have to pay for merchandise.
• Comparing my proceeds from last year and this year, I can say that the company has made a radical change. If we continue with this income, we will soon be able to franchise the company.
• From the proceeds of my company, I had to subtract the merchandise expenses, salaries of my employees, and the reinvestment of capital. After I’ve done that, is when I can calculate my actual net profit.

As a verb, the word proceed means to continue something after a pause or where an object comes from.

We can see the following examples of the use of the word as a verb,

• If the bank approves the loan, we can proceed with the purchase of the house. If not, we will have to look for another apartment for rent to live there.
• I must proceed to do my academic work for the university. My graduation is in two weeks, and if I don’t turn in this essay, I won’t earn my degree as a systems engineer.
• If I proceed with the pharmaceutical company lawsuit, I could lose all my money on lawyers. If I don’t, the drug store will continue to mislead more customers.
• Tomorrow we must go to court to proceed with the final verdict. If our witness can convince the jury, we have a chance to win the case. If not, we will have to lengthen it.

Synonyms of Profit

The word profit can be replaced with any of the following terms.

Benefit

The benefit is the amount of money to be made, especially with an investment.

Some examples of using the word are:

• The benefits of buying real estate are outstanding. With my savings, I will buy another property, this time it will be in the countryside instead of the beach.
• With the benefits that I have obtained from the certificate in the bank, I will pay my student loan. I have been paying that debt for three years, and it will finally be paid off with this extra money.
• I was watching my bank account, and I saw that the benefits of my investment were double the money I had. Now, I will invest more money to triple it.

Earnings

Earnings are the benefit or advantage that is obtained from a thing or situation.

Some examples of the use of the word are:

• If we buy a huge yacht, we will soon make huge earnings. It is best to keep it as an extra option in our beach house, and it can be rented if the client wishes.
• I own a restaurant that is used as a bar at night. Two months ago, they opened a club on the same street as my business, and my earnings are going down more and more. I don’t know how to innovate my company, but I definitely won’t let them steal my customers.
• When we invest in the stock market, the increase in risk is directly proportional to the rise in earnings.

Synonyms Of Proceeds

The following terms can replace the word proceeds.

Income

Income is the amount of money earned or raised.

Some examples of its correct use are:

• All incomes from the sale of cookies will go to non-profit foundations.
• The income generated by my company will be reinvested to buy more materials because I spent my business capital on a trip to Disney last year.
• In my house, we have a book where we control income and expenses, and thus we have great family finances.

Revenue

Revenue is defined as the quantity of money that a capital periodically produces.

Here we can see some examples:

• My mother wants to withdraw her investment from a company because she lacks the money. I told her that if she waited, she would get it all back and with the revenue.
• I work in the insurance area, and I earn a monthly revenue for each person who insures.
• I want to invest in the bank to make an annual revenue. The profit is not much, but it is better to put the money to produce than to have it saved doing nothing.

Conclusion

Profits and proceeds do not have the same meanings, but they can be substituted for each other depending on the context. However, it is essential to know how to use both terms because they are not synonymous in some cases.