Quote:
Originally Posted by lowbudgethero
It was mostly due to having to buy/fix necessary equipment, restaurant is still afloat though.
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That stuff does not go into gross profit margin. I think we're taking about net profits. Gross profit is simply sales minus cost of goods sold. To have a negative Gross profit your sales have to be less than cost of goods sold, which means you're selling stuff for less than you paid for it. Obviously a good way to go out of business in a hurry. Net profits take into account all the other expenses with running a business such as rent and equipment. I would guess the situation in question is equipment related, that is generally the way you have accounting losses and taxable income at the same time. You have to have some type of expense or writeoff that the IRS does not allow.