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Simple English definitions for legal terms
negative income
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A quick definition of negative income:
Term: Negative Income
Definition: Negative income means that a person or business has earned less money than they have spent. This is also known as a loss. It is like having a piggy bank with less money in it than you put in. When this happens, it can be difficult to pay bills and make ends meet.
A more thorough explanation:
Definition: Negative income refers to a situation where a person or business has more expenses than income, resulting in a loss.
For example, if a business spends $10,000 on rent, utilities, and supplies, but only earns $8,000 in revenue, the business has a negative income of $2,000. This means the business is losing money and may need to make changes to increase revenue or decrease expenses.
Another example is an individual who has more deductions and expenses than their income, resulting in a negative income. This may happen if the person has a low-paying job or is unemployed and has significant medical expenses or other deductions.
These examples illustrate how negative income can be a challenging financial situation, as it can lead to debt and financial instability. It is important to track income and expenses carefully to avoid negative income and make necessary adjustments to improve financial health.