Account balance The amount of a particular account at a given time.

Accounts payable Amounts you owe vendors for supplies or services already provided.

Accounts receivable Amounts that clients or customers owe you for products or services that you've provided.

Administrative expenses Expenses related to managing the business rather than to sales or cost-of-goods-sold.

Aging Tracking the time between now and when payment was due on an invoice (generally described in terms such as thirty days, sixty days, and ninety days overdue).

Amortization The length of time over which the repayment of a debt is calculated.

Annual report A yearly summary of the finances and general situation of a business.

Appraisal An estimate of an asset's value.

Appreciation The increase in an asset's value over time.

Arrears An amount that's overdue, often used in relation to taxes.

Asset Something of long-lasting value that is owned by you or the business.

Bad debts Amounts owed to you that are uncollectible.

Balance sheet A summary of the business's assets, liabilities, and equity.

Bill of sale A receipt stating what was sold, to whom, when, and for how much.

Bottom line Net profits, which is what's left over after all expenses are deducted from income.

Break-even analysis A calculation of prices and costs that projects the point at which a business will make as much as it spends.

Budget Projected income and expenses.

Business plan A document that describes your business and its projected growth, including goals, strategies, and financial information such as revenues, expenses, and profits.

Capital Money invested in a business.

Capital equipment Assets such as vehicles that generally depreciate, or lose value over time.

Cash discount A discount offered to a customer in exchange for paying immediately.

Cash flow Tracking money as it flows into and out of a business.

Collateral Something of value, such as a vehicle, that's pledged to a lender in order to secure a loan.

Commission A percentage of the sales price paid to a salesperson.

Consignment Placing products for sale with another business, which takes a percentage of the sales price in return.

Corporation An incorporated business and a separate legal entity from its owners.

Cost of goods sold The expenses that are directly related to the production or purchase of the products that you sell.

Current assets Items such as cash or inventory that are assets of value, but which will be used up or converted to cash in the short term (within a year).

Current liabilities Amounts due (payable) by a business in the short term (within a year), including outstanding bills, loan payments, taxes, etc.

Current ratio The comparison of current assets and current liabilities.

Debt Borrowed money that you or the business owe.

Depreciation The decline in value of a capital asset over time.

Direct mail Selling products or services by mail.

Distributor A business that buys products from manufacturers for resale to retailers.

Entrepreneur Someone who starts and runs his or her own business; often considered a positive risk-taker.

Equity The value of a business after liabilities are subtracted from assets. This reflects the business's earnings over time and the start-up funding that the owners or investors contributed.

FIFO Accounting for inventory on the basis of “first in; first out.”

Franchise A business that involves an ongoing relationship with a parent company, usually including a shared trade name and a franchise fee.

Gross profit Sales revenues minus the cost of goods sold.

Income Money that flows into a business.

Income statement A summary of income and expenses for the business.

Interest A percentage that you pay in return for borrowing money.

Inventory Goods purchased for resale but not yet sold or raw materials to be used for making a product for sale.

Investment Money (or other assets) put into the business.

Liability Any debt or unpaid bill that the business owes.

Liquidity How easily a business can convert assets to cash.

LIFO Accounting for inventory on the basis of “last in; first out.”

Limited liability company An LLC, a type of business organization similar to an S corporation, in which the business exists separately from its owners, limiting their liability for the corporate debts.

Limited partnership A type of business organization in which one or more of the partners is solely an investor and whose liability is limited to the amount invested.

Line of credit An open source of funds up to a maximum, such as $10,000, that you can borrow as needed and pay back when possible with certain conditions.

Loan A lump sum of money that is borrowed and then paid back with fixed payments over time.

Loan agreement The written terms of a loan including the amount, term, and interest rate.

Market niche A small part of a customer base that a business could target.

Market research Finding out how big the market is for your business — how many potential customers there are, how much they spend, and what your competition is.

Marketing plan A plan that identifies the market for a product or service and the methods by which the business will approach and sell to that market.

Merchandise Product for sale.

Net sales Sales revenue minus discounts and returns.

Net worth What's left over when you subtract your liabilities from your assets (what you owe from what you own).

Operating costs What it costs you to run the business on a day-to-day basis.

Overhead Ongoing administrative costs that typically need to be paid no matter how much or how little you sell.

Partnership A type of business organization that involves two or more people who are owners (not employees) and who are fully liable for the debts of the business.

Payables Money due to suppliers of products or services.

Principal The amount of money that's borrowed.

Profit and Loss statement A financial statement, also known as a P&L or an Income Statement, which shows a business's income and expenses.

Pro forma A projected estimate, as in a pro forma income statement.

Projections Estimates of future sales, expenses, or profits.

Publicity News stories in the media that you haven't paid for. They're considered editorial, not advertising.

Receivables Amounts that clients or customers owe you for products or services that you've provided.

Residential zone An area of a community set aside for homes.

Retail sales Sales to the public.

Retailing Selling to the public.

Revenue Money coming into a business.

S Corporation Also known as an S Corp, a form of incorporation providing tax and liability benefits, often used for small businesses.

Sales lead A potential customer.

Sole proprietorship The simplest form of business organization, in which there is only one owner and that owner is personally liable for the debts of the business.

Target market The specific group of customers to which a business expects to sell.

Telemarketing Selling by telephone.

Trade association A group dedicated to serving a particular trade or kind of business.

Turnover The frequency with which inventory sells, or “turns over” during the year.

Venture capital Outside investment in a business.

Wholesale Selling (or buying) items that are destined for resale to the public.

Working capital The money needed to operate the business on a day-to-day basis — usually the difference between current assets and current liabilities.

Zoning The division of a community into zones set aside for specific uses, including residential, commercial, or industrial.