When a business owner is looking at his profit margin, he wants to look at how his productivity this quarter or year compares with quarters or years in the past. Because the income tax rates change slightly each year, it is the most accurate for a business owner to compare productivity in this manner. Finding the percent of profit before income tax is a rather simple procedure.
Determine the time frame for which you will compute a percentage of profit. You might decide to compute profit quarterly or annually, for example.
Add all income for the time frame for which you are finding the percent of profit before income tax. Look at every dollar that came in during that period for all services and all products sold.
Calculate the amount of expenses during the period for which you are finding the percent of profit before income tax. You should include expenses for vendors, supplies and employees.
Divide the amount of your expenses during the period by the amount of your income during the period. The result will be a number that includes a decimal point.
Multiply the result from Step 4 by 100 and place a % sign behind that number. This is the percent of profit before income taxes for the period you determined in Step 1.