Definition: Money your business owes suppliers for goods or services received but not yet paid for.
Simply: Bills you owe.
Example: Your printer invoice for $500 is in accounts payable until paid.
Tip: Pay on time to protect business credit.
Definition: Money owed to your business by customers for goods or services delivered.
Simply: Money customers owe you.
Example: A client invoiced $2,000 net-30 is in receivables.
Tip: Follow up the day an invoice goes past due.
Definition: Resources your business owns that have economic value.
Simply: What you own.
Example: Cash, equipment, and inventory are assets.
Tip: Review your asset list annually.
Definition: Financial statement showing assets, liabilities, and equity at a point in time.
Simply: Snapshot of what you own vs owe.
Example: Lenders ask for this before approving a loan.
Tip: Prepare quarterly.
Definition: Daily recording of business financial transactions.
Simply: Tracking the money.
Example: Logging every sale and expense.
Tip: Do it weekly, not yearly.
Definition: A plan that estimates revenue and expenses over a period.
Simply: Your money plan.
Example: A monthly $5,000 marketing budget.
Tip: Compare actuals to budget monthly.
Definition: Credit history tied to your EIN, separate from your personal credit.
Simply: Credit for the business.
Example: Net-30 vendor accounts build business credit.
Tip: Start with one vendor account early.
Definition: Movement of money in and out of a business.
Simply: Money coming in vs going out.
Example: Positive cash flow funds growth.
Tip: Track weekly.
Definition: Direct costs of producing goods or services sold.
Simply: What it costs to deliver.
Example: Materials and direct labor.
Tip: Lower COGS = higher gross margin.
Definition: Allocating the cost of an asset over its useful life.
Simply: Spreading out a big purchase.
Example: A $10,000 vehicle depreciated over 5 years.
Tip: Ask your tax preparer about Section 179.
Definition: Owner's interest in the business after liabilities.
Simply: Your stake.
Example: Assets minus liabilities equals equity.
Tip: Grows as you reinvest profit.
Definition: Money spent to operate the business.
Simply: What you spend.
Example: Rent, software, supplies.
Tip: Categorize for tax deductions.
Definition: Revenue minus cost of goods sold.
Simply: Profit before overhead.
Example: $100k revenue – $40k COGS = $60k gross profit.
Tip: Track gross margin %.
Definition: Report of revenue, expenses, and profit over a period.
Simply: P&L for the period.
Example: Monthly income statement.
Tip: Review monthly.
Definition: Money the business owes.
Simply: What you owe.
Example: Loans, credit cards, accounts payable.
Tip: Pay down high-interest first.
Definition: What remains after all expenses, taxes, and interest.
Simply: Bottom line.
Example: Revenue – all expenses = net profit.
Tip: Pay yourself from net profit.
Definition: Day-to-day costs of running the business.
Simply: Cost to keep doors open.
Example: Rent, utilities, salaries.
Tip: Audit annually.
Definition: Profit as a percentage of revenue.
Simply: How much of every dollar is profit.
Example: $10 profit on $100 = 10% margin.
Tip: Compare to industry benchmarks.
Definition: Total income from sales before expenses.
Simply: Top line.
Example: All invoices paid this month.
Tip: Track by product/service line.
Definition: Current assets minus current liabilities.
Simply: Short-term cash to operate.
Example: Used to cover payroll and inventory.
Tip: Aim for positive working capital.
Definition: Key financial or business concept: EIN.
Simply: EIN explained in plain language.
Example: Common use of EIN in a small business context.
Tip: Ask Bright Future Finances how EIN applies to your business.
Definition: Key financial or business concept: LLC.
Simply: LLC explained in plain language.
Example: Common use of LLC in a small business context.
Tip: Ask Bright Future Finances how LLC applies to your business.
Definition: Key financial or business concept: S-Corp.
Simply: S-Corp explained in plain language.
Example: Common use of S-Corp in a small business context.
Tip: Ask Bright Future Finances how S-Corp applies to your business.
Definition: Key financial or business concept: C-Corp.
Simply: C-Corp explained in plain language.
Example: Common use of C-Corp in a small business context.
Tip: Ask Bright Future Finances how C-Corp applies to your business.
Definition: Key financial or business concept: Sole Proprietorship.
Simply: Sole Proprietorship explained in plain language.
Example: Common use of Sole Proprietorship in a small business context.
Tip: Ask Bright Future Finances how Sole Proprietorship applies to your business.
Definition: Key financial or business concept: 1099.
Simply: 1099 explained in plain language.
Example: Common use of 1099 in a small business context.
Tip: Ask Bright Future Finances how 1099 applies to your business.
Definition: Key financial or business concept: W-9.
Simply: W-9 explained in plain language.
Example: Common use of W-9 in a small business context.
Tip: Ask Bright Future Finances how W-9 applies to your business.
Definition: Key financial or business concept: W-2.
Simply: W-2 explained in plain language.
Example: Common use of W-2 in a small business context.
Tip: Ask Bright Future Finances how W-2 applies to your business.
Definition: Key financial or business concept: Payroll Tax.
Simply: Payroll Tax explained in plain language.
Example: Common use of Payroll Tax in a small business context.
Tip: Ask Bright Future Finances how Payroll Tax applies to your business.
Definition: Key financial or business concept: Self-Employment Tax.
Simply: Self-Employment Tax explained in plain language.
Example: Common use of Self-Employment Tax in a small business context.
Tip: Ask Bright Future Finances how Self-Employment Tax applies to your business.
Definition: Key financial or business concept: Quarterly Estimated Tax.
Simply: Quarterly Estimated Tax explained in plain language.
Example: Common use of Quarterly Estimated Tax in a small business context.
Tip: Ask Bright Future Finances how Quarterly Estimated Tax applies to your business.
Definition: Key financial or business concept: Sales Tax.
Simply: Sales Tax explained in plain language.
Example: Common use of Sales Tax in a small business context.
Tip: Ask Bright Future Finances how Sales Tax applies to your business.
Definition: Key financial or business concept: Use Tax.
Simply: Use Tax explained in plain language.
Example: Common use of Use Tax in a small business context.
Tip: Ask Bright Future Finances how Use Tax applies to your business.
Definition: Key financial or business concept: Schedule C.
Simply: Schedule C explained in plain language.
Example: Common use of Schedule C in a small business context.
Tip: Ask Bright Future Finances how Schedule C applies to your business.
Definition: Key financial or business concept: Schedule E.
Simply: Schedule E explained in plain language.
Example: Common use of Schedule E in a small business context.
Tip: Ask Bright Future Finances how Schedule E applies to your business.
Definition: Key financial or business concept: Form 1120.
Simply: Form 1120 explained in plain language.
Example: Common use of Form 1120 in a small business context.
Tip: Ask Bright Future Finances how Form 1120 applies to your business.
Definition: Key financial or business concept: Form 1120-S.
Simply: Form 1120-S explained in plain language.
Example: Common use of Form 1120-S in a small business context.
Tip: Ask Bright Future Finances how Form 1120-S applies to your business.
Definition: Key financial or business concept: Form 1065.
Simply: Form 1065 explained in plain language.
Example: Common use of Form 1065 in a small business context.
Tip: Ask Bright Future Finances how Form 1065 applies to your business.
Definition: Key financial or business concept: Pass-Through Entity.
Simply: Pass-Through Entity explained in plain language.
Example: Common use of Pass-Through Entity in a small business context.
Tip: Ask Bright Future Finances how Pass-Through Entity applies to your business.
Definition: Key financial or business concept: Reasonable Compensation.
Simply: Reasonable Compensation explained in plain language.
Example: Common use of Reasonable Compensation in a small business context.
Tip: Ask Bright Future Finances how Reasonable Compensation applies to your business.
Definition: Key financial or business concept: Owner Draw.
Simply: Owner Draw explained in plain language.
Example: Common use of Owner Draw in a small business context.
Tip: Ask Bright Future Finances how Owner Draw applies to your business.
Definition: Key financial or business concept: Distribution.
Simply: Distribution explained in plain language.
Example: Common use of Distribution in a small business context.
Tip: Ask Bright Future Finances how Distribution applies to your business.
Definition: Key financial or business concept: Retained Earnings.
Simply: Retained Earnings explained in plain language.
Example: Common use of Retained Earnings in a small business context.
Tip: Ask Bright Future Finances how Retained Earnings applies to your business.
Definition: Key financial or business concept: Capital Contribution.
Simply: Capital Contribution explained in plain language.
Example: Common use of Capital Contribution in a small business context.
Tip: Ask Bright Future Finances how Capital Contribution applies to your business.
Definition: Key financial or business concept: Fixed Cost.
Simply: Fixed Cost explained in plain language.
Example: Common use of Fixed Cost in a small business context.
Tip: Ask Bright Future Finances how Fixed Cost applies to your business.
Definition: Key financial or business concept: Variable Cost.
Simply: Variable Cost explained in plain language.
Example: Common use of Variable Cost in a small business context.
Tip: Ask Bright Future Finances how Variable Cost applies to your business.
Definition: Key financial or business concept: Break-Even Point.
Simply: Break-Even Point explained in plain language.
Example: Common use of Break-Even Point in a small business context.
Tip: Ask Bright Future Finances how Break-Even Point applies to your business.
Definition: Key financial or business concept: Contribution Margin.
Simply: Contribution Margin explained in plain language.
Example: Common use of Contribution Margin in a small business context.
Tip: Ask Bright Future Finances how Contribution Margin applies to your business.
Definition: Key financial or business concept: EBITDA.
Simply: EBITDA explained in plain language.
Example: Common use of EBITDA in a small business context.
Tip: Ask Bright Future Finances how EBITDA applies to your business.
Definition: Key financial or business concept: ROI.
Simply: ROI explained in plain language.
Example: Common use of ROI in a small business context.
Tip: Ask Bright Future Finances how ROI applies to your business.
Definition: Key financial or business concept: ROA.
Simply: ROA explained in plain language.
Example: Common use of ROA in a small business context.
Tip: Ask Bright Future Finances how ROA applies to your business.
Definition: Key financial or business concept: ROE.
Simply: ROE explained in plain language.
Example: Common use of ROE in a small business context.
Tip: Ask Bright Future Finances how ROE applies to your business.
Definition: Key financial or business concept: Burn Rate.
Simply: Burn Rate explained in plain language.
Example: Common use of Burn Rate in a small business context.
Tip: Ask Bright Future Finances how Burn Rate applies to your business.
Definition: Key financial or business concept: Runway.
Simply: Runway explained in plain language.
Example: Common use of Runway in a small business context.
Tip: Ask Bright Future Finances how Runway applies to your business.
Definition: Key financial or business concept: Accrual Accounting.
Simply: Accrual Accounting explained in plain language.
Example: Common use of Accrual Accounting in a small business context.
Tip: Ask Bright Future Finances how Accrual Accounting applies to your business.
Definition: Key financial or business concept: Cash Accounting.
Simply: Cash Accounting explained in plain language.
Example: Common use of Cash Accounting in a small business context.
Tip: Ask Bright Future Finances how Cash Accounting applies to your business.
Definition: Key financial or business concept: Double-Entry Bookkeeping.
Simply: Double-Entry Bookkeeping explained in plain language.
Example: Common use of Double-Entry Bookkeeping in a small business context.
Tip: Ask Bright Future Finances how Double-Entry Bookkeeping applies to your business.
Definition: Key financial or business concept: Chart of Accounts.
Simply: Chart of Accounts explained in plain language.
Example: Common use of Chart of Accounts in a small business context.
Tip: Ask Bright Future Finances how Chart of Accounts applies to your business.
Definition: Key financial or business concept: General Ledger.
Simply: General Ledger explained in plain language.
Example: Common use of General Ledger in a small business context.
Tip: Ask Bright Future Finances how General Ledger applies to your business.
Definition: Key financial or business concept: Journal Entry.
Simply: Journal Entry explained in plain language.
Example: Common use of Journal Entry in a small business context.
Tip: Ask Bright Future Finances how Journal Entry applies to your business.
Definition: Key financial or business concept: Trial Balance.
Simply: Trial Balance explained in plain language.
Example: Common use of Trial Balance in a small business context.
Tip: Ask Bright Future Finances how Trial Balance applies to your business.
Definition: Key financial or business concept: Reconciliation.
Simply: Reconciliation explained in plain language.
Example: Common use of Reconciliation in a small business context.
Tip: Ask Bright Future Finances how Reconciliation applies to your business.
Definition: Key financial or business concept: Bank Feed.
Simply: Bank Feed explained in plain language.
Example: Common use of Bank Feed in a small business context.
Tip: Ask Bright Future Finances how Bank Feed applies to your business.
Definition: Key financial or business concept: Bank Statement.
Simply: Bank Statement explained in plain language.
Example: Common use of Bank Statement in a small business context.
Tip: Ask Bright Future Finances how Bank Statement applies to your business.
Definition: Key financial or business concept: Credit Memo.
Simply: Credit Memo explained in plain language.
Example: Common use of Credit Memo in a small business context.
Tip: Ask Bright Future Finances how Credit Memo applies to your business.
Definition: Key financial or business concept: Debit Memo.
Simply: Debit Memo explained in plain language.
Example: Common use of Debit Memo in a small business context.
Tip: Ask Bright Future Finances how Debit Memo applies to your business.
Definition: Key financial or business concept: Invoice.
Simply: Invoice explained in plain language.
Example: Common use of Invoice in a small business context.
Tip: Ask Bright Future Finances how Invoice applies to your business.
Definition: Key financial or business concept: Estimate.
Simply: Estimate explained in plain language.
Example: Common use of Estimate in a small business context.
Tip: Ask Bright Future Finances how Estimate applies to your business.
Definition: Key financial or business concept: Purchase Order.
Simply: Purchase Order explained in plain language.
Example: Common use of Purchase Order in a small business context.
Tip: Ask Bright Future Finances how Purchase Order applies to your business.
Definition: Key financial or business concept: Net Terms.
Simply: Net Terms explained in plain language.
Example: Common use of Net Terms in a small business context.
Tip: Ask Bright Future Finances how Net Terms applies to your business.
Definition: Key financial or business concept: Aging Report.
Simply: Aging Report explained in plain language.
Example: Common use of Aging Report in a small business context.
Tip: Ask Bright Future Finances how Aging Report applies to your business.
Definition: Key financial or business concept: Bad Debt.
Simply: Bad Debt explained in plain language.
Example: Common use of Bad Debt in a small business context.
Tip: Ask Bright Future Finances how Bad Debt applies to your business.
Definition: Key financial or business concept: Write-Off.
Simply: Write-Off explained in plain language.
Example: Common use of Write-Off in a small business context.
Tip: Ask Bright Future Finances how Write-Off applies to your business.
Definition: Key financial or business concept: Allowance for Doubtful Accounts.
Simply: Allowance for Doubtful Accounts explained in plain language.
Example: Common use of Allowance for Doubtful Accounts in a small business context.
Tip: Ask Bright Future Finances how Allowance for Doubtful Accounts applies to your business.
Definition: Key financial or business concept: Inventory Turnover.
Simply: Inventory Turnover explained in plain language.
Example: Common use of Inventory Turnover in a small business context.
Tip: Ask Bright Future Finances how Inventory Turnover applies to your business.
Definition: Key financial or business concept: FIFO.
Simply: FIFO explained in plain language.
Example: Common use of FIFO in a small business context.
Tip: Ask Bright Future Finances how FIFO applies to your business.
Definition: Key financial or business concept: LIFO.
Simply: LIFO explained in plain language.
Example: Common use of LIFO in a small business context.
Tip: Ask Bright Future Finances how LIFO applies to your business.
Definition: Key financial or business concept: Tangible Asset.
Simply: Tangible Asset explained in plain language.
Example: Common use of Tangible Asset in a small business context.
Tip: Ask Bright Future Finances how Tangible Asset applies to your business.
Definition: Key financial or business concept: Intangible Asset.
Simply: Intangible Asset explained in plain language.
Example: Common use of Intangible Asset in a small business context.
Tip: Ask Bright Future Finances how Intangible Asset applies to your business.
Definition: Key financial or business concept: Goodwill.
Simply: Goodwill explained in plain language.
Example: Common use of Goodwill in a small business context.
Tip: Ask Bright Future Finances how Goodwill applies to your business.
Definition: Key financial or business concept: Amortization.
Simply: Amortization explained in plain language.
Example: Common use of Amortization in a small business context.
Tip: Ask Bright Future Finances how Amortization applies to your business.
Definition: Key financial or business concept: Capital Expenditure.
Simply: Capital Expenditure explained in plain language.
Example: Common use of Capital Expenditure in a small business context.
Tip: Ask Bright Future Finances how Capital Expenditure applies to your business.
Definition: Key financial or business concept: Operating Cash Flow.
Simply: Operating Cash Flow explained in plain language.
Example: Common use of Operating Cash Flow in a small business context.
Tip: Ask Bright Future Finances how Operating Cash Flow applies to your business.
Definition: Key financial or business concept: Free Cash Flow.
Simply: Free Cash Flow explained in plain language.
Example: Common use of Free Cash Flow in a small business context.
Tip: Ask Bright Future Finances how Free Cash Flow applies to your business.
Definition: Key financial or business concept: Line of Credit.
Simply: Line of Credit explained in plain language.
Example: Common use of Line of Credit in a small business context.
Tip: Ask Bright Future Finances how Line of Credit applies to your business.
Definition: Key financial or business concept: Term Loan.
Simply: Term Loan explained in plain language.
Example: Common use of Term Loan in a small business context.
Tip: Ask Bright Future Finances how Term Loan applies to your business.
Definition: Key financial or business concept: SBA Loan.
Simply: SBA Loan explained in plain language.
Example: Common use of SBA Loan in a small business context.
Tip: Ask Bright Future Finances how SBA Loan applies to your business.
Definition: Key financial or business concept: Merchant Cash Advance.
Simply: Merchant Cash Advance explained in plain language.
Example: Common use of Merchant Cash Advance in a small business context.
Tip: Ask Bright Future Finances how Merchant Cash Advance applies to your business.
Definition: Key financial or business concept: Factoring.
Simply: Factoring explained in plain language.
Example: Common use of Factoring in a small business context.
Tip: Ask Bright Future Finances how Factoring applies to your business.
Definition: Key financial or business concept: Personal Guarantee.
Simply: Personal Guarantee explained in plain language.
Example: Common use of Personal Guarantee in a small business context.
Tip: Ask Bright Future Finances how Personal Guarantee applies to your business.
Definition: Key financial or business concept: Collateral.
Simply: Collateral explained in plain language.
Example: Common use of Collateral in a small business context.
Tip: Ask Bright Future Finances how Collateral applies to your business.
Definition: Key financial or business concept: Lien.
Simply: Lien explained in plain language.
Example: Common use of Lien in a small business context.
Tip: Ask Bright Future Finances how Lien applies to your business.
Definition: Key financial or business concept: Audit.
Simply: Audit explained in plain language.
Example: Common use of Audit in a small business context.
Tip: Ask Bright Future Finances how Audit applies to your business.
Definition: Key financial or business concept: Tax Audit.
Simply: Tax Audit explained in plain language.
Example: Common use of Tax Audit in a small business context.
Tip: Ask Bright Future Finances how Tax Audit applies to your business.
Definition: Key financial or business concept: Internal Control.
Simply: Internal Control explained in plain language.
Example: Common use of Internal Control in a small business context.
Tip: Ask Bright Future Finances how Internal Control applies to your business.
Definition: Key financial or business concept: Segregation of Duties.
Simply: Segregation of Duties explained in plain language.
Example: Common use of Segregation of Duties in a small business context.
Tip: Ask Bright Future Finances how Segregation of Duties applies to your business.
Definition: Key financial or business concept: DBA.
Simply: DBA explained in plain language.
Example: Common use of DBA in a small business context.
Tip: Ask Bright Future Finances how DBA applies to your business.
Definition: Key financial or business concept: Operating Agreement.
Simply: Operating Agreement explained in plain language.
Example: Common use of Operating Agreement in a small business context.
Tip: Ask Bright Future Finances how Operating Agreement applies to your business.
Definition: Key financial or business concept: Bylaws.
Simply: Bylaws explained in plain language.
Example: Common use of Bylaws in a small business context.
Tip: Ask Bright Future Finances how Bylaws applies to your business.
Definition: Key financial or business concept: Articles of Organization.
Simply: Articles of Organization explained in plain language.
Example: Common use of Articles of Organization in a small business context.
Tip: Ask Bright Future Finances how Articles of Organization applies to your business.
Definition: Key financial or business concept: Articles of Incorporation.
Simply: Articles of Incorporation explained in plain language.
Example: Common use of Articles of Incorporation in a small business context.
Tip: Ask Bright Future Finances how Articles of Incorporation applies to your business.
Definition: Key financial or business concept: Annual Report.
Simply: Annual Report explained in plain language.
Example: Common use of Annual Report in a small business context.
Tip: Ask Bright Future Finances how Annual Report applies to your business.
Definition: Key financial or business concept: Registered Agent.
Simply: Registered Agent explained in plain language.
Example: Common use of Registered Agent in a small business context.
Tip: Ask Bright Future Finances how Registered Agent applies to your business.
Definition: Key financial or business concept: Business License.
Simply: Business License explained in plain language.
Example: Common use of Business License in a small business context.
Tip: Ask Bright Future Finances how Business License applies to your business.