Business Terms to Know

1. Startup Costs: The amount of money needed to launch a business.
2. Fixed Costs: Expenses that remain constant over time (e.g., rent).
3. Variable Costs: Costs that fluctuate based on seasonality or demand.
4. Business Bank Account: A dedicated account for business finances, separate from personal funds.
5. Employer Identification Number (EIN): A unique number issued by the IRS for tax purposes.
6. Business Loans: Borrowed money with interest that must be repaid, often used for purchasing assets.
7. Business Grants: Non-repayable funds provided to support business initiatives.
8. Cost of Goods Sold (COGS): Direct costs associated with producing goods sold by a company.
   • Formula: Starting Inventory - Unsold Stock = COGS.
9. Payables: Money your business owes to others.
10. Receivables: Money owed to your business by customers.
11. Gross Revenue: Total income generated before expenses.
12. Net Revenue: Income remaining after COGS is deducted.
13. Break-Even Analysis: Calculation to determine when total revenue equals total costs.
14. Profit and Loss Statement (P&L): A report that tracks revenue, expenses, and profits over a set period.
15. Business Assets: Items or resources owned by the business or owed to it.
16. Liabilities: Financial obligations or debts owed by the business.
17. Working Capital: The difference between current assets and current liabilities, indicating short-term financial health.
18. Owner’s Equity: The owner’s investment in the business plus retained earnings.
19. Balance Sheet: A financial statement that summarizes a company’s assets, liabilities, and owner’s equity.