There are two types of sources of income in a business. First, is capital income, and second is revenue income. There is a difference between the income sources of business.
The following are the main differences between capital income and revenue income with examples.
What is Capital Income?
The income that arises from non-recurring transactions by certain or certain events is called capital income.
Capital Income Examples:
- Price received on investments in small saving schemes.
- The premium on letting out shops or houses.
- Bonus shares on investment.
- Hidden treasures were found in the dismantling of the old house.
There are also some capital losses and revenue losses in a business.
What is Revenue Income?
Income arising from Recurring transactions in the ordinary course of business is called revenue income.
Revenue Income Examples:
- Commission received.
- Discount received.
- Interest from debtors.
- Fees and room rent from patients.
- Donations and charities received by the charitable institution.
- Fright received by transport companies.
- Interest dividends and bonus shares received by the investment company.
Both income sources of a running business have similarities and differences.
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Revenue-based financing is perfect for SaaS businesses and other companies whose primary income is based on subscriptions. A consistent high monthly recurring revenue (MRR) along with high gross margins combine to qualify a business for a royalty-based loan.