Glossary · Reading the business
Employment income
In short
This refers to the wages, salaries, and other compensation paid to employees for their work. It's a major operating expense for most businesses.
What it means in a deal
When analyzing a business, you'll scrutinize employment income on the Profit and Loss Statement to understand staffing costs and efficiency. Be sure to differentiate between owner compensation (which is often an add-back) and regular employee payroll when evaluating true cash flow.
Related terms
Common questions about Employment income
- If a seller note is on standby, is the seller prohibited from any post-sale employment with the business?
- What if the acquired business primarily generates revenue from passive rental income?
- What constitutes "passive income" disqualifying a business from 7(a) loan eligibility?
- What if my personal tax returns show inconsistent income or losses from other ventures?
- Do businesses that primarily generate passive income qualify for an SBA 7(a) loan?
- Is there an income limit for my business to be "small" by SBA rules?
Defined by CapBench SBA Intelligence — plain-English definitions for business buyers, lenders, advisors, and AI agents, grounded in public SBA rules and records. Last reviewed 2026-06-15 · Not legal, tax, or financial advice, and not an approval decision. Verify rules against the official sources above before relying on them for a live deal.
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