Income is any money coming in to a business. There are two categories:

• Capital Income

• Revenue Income

Capital income is the money invested by the owners of a business that is used to set up businesses or buy additional equipment. It is usually used to buy things that will stay in the business of a medium-to-long period of time(More than a year). For example, premises, vehicles or equipment. These are also known as fixed assets and non-current assets.

When setting up a business capital income might also be used to buy opening stock, but, as the business develops, stock should be paid for by sales income. The sources of capital income available to a business are influenced by the type of business it is.

A loan is an amount of money lent to a business from a bank or other financial institution. It is received as a lump sum and has to be paid back in monthly installments over a pre agreed time scale which is usually 5 years. As well as the repayment of the loan there is usually a monthly interest repayment. The rate may be fixed or variable and tehrefore can be affected by the economy. These can be seen as expensive and repayments must be made even if the business is not making a profit.

Like people businesses have to justify what the money will be used for and an asset must be used to secure the loan. If repayments are not made the asset may be claimed by the bank.

These are similar to a bank loan, but they are usually for a larger sum of money and paid back over a longer time scale (typically 25 years). These are always secured on an asset, normally a property. Individuals will take out a mortgage to buy a house. Business may use one to buy their premises such as a factory or retail unit.

A business becomes a company when it is registered with Companies House and issues shares to its shareholders. The shareholders are the owners of the business and all contribute towards the capital income. Shareholders normally receive a voting right. The more shares someone owns they greater their ability to influence decisions. Shareholders are rewarded for their investment through dividend payments, this is a share of the profits.

Owner's capital is money invested in a business from the owner's personal savings. Sole traders tend to secure all loans against their own personal property which is a big risk as they are ultimately responsible for the debts of the business. This can also limit the amount of money available to the business and therefore restrict growth. However if the business is successful they get to keep all of the profits.

When the business is a partnership the risks and profits are shared amongst the owners.

Debentures are medium- to long term sources of capital income. Large companies often use them to secure income. Interest is payable, normally at a fixed rate, and the debenture is repaid as a lump sum, normally on a pre-arranged date. Debentures can be secured against an asset, they are a form of loan capital.

Revenue income is the money which comes into a business from performing its day-to-day function - selling goods or providing a service. The nature of the revenue income depends on the activities that the business does to bring in money.

Sales or sales turnover, is money coming in from the sale of goods or services. This is determined by the prices charged and the number of customers. Sales can either be cash sales (collected there and then) or credit sales (the customer pays at a later date). Its is important to distinguish between both.

A business that owns property and charges others for use of all or part of that property will receive rent as their main source of income. If a business owns a house and rents out three rooms, then it will receive rent from each of these renters. Similarly, a business may own land or offices which it rents out to other businesses.

A business may sell products or services as an agent of another business. They sell another business's products on their behalf, and for each sale they make, they get a percentage of that sale otherwise known as a commission. This could be a flat fee or a percentage of the revenue. Often estate agents work on commission when selling houses.

This is money earned on savings or lending. This can act as a revenue bringing more money into the business. Businesses may also lend money and again bring money in through interest payments.

Discount received is when a business is given a percentage off a sale, normally in return for quick payment or a bulk order. This reduces the costs to the business.