Gross Income minus business expenses and deductions will be considered.
If you were a salaried employee, it would be gross income.
If the requirements are not met, a co-sponsor will be required. Consider consulting with an immigration attorney for case-specific advice. Contact information is readily available in Avvo or at AILA.
Generally, gross income - but since your tax returns will show significant expenses, it's good practice to anticipate a problem and perhaps get a co-sponsor or see if there is some other method of meeting the requirements.
Further info on joint sponsorship here: http://www.avvo.com/legal-guides/ugc/joint-sponsorship-legal-guide
Speak with a lawyer for further guidance on ways to handle this.