Plain-English definitions
Business and Money Glossary
Business talk is full of shorthand. This glossary turns the most common terms into one plain sentence each, so you can read a pitch, a bank form or a founder story without guessing.
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The glossary
| Term | Plain definition |
|---|---|
| Revenue | All the money that comes in from sales before any costs are taken out. |
| Profit | What is left after subtracting costs from revenue. |
| Gross profit | Revenue minus the direct cost of the goods or services sold. |
| Net profit | What remains after every cost, including overhead, interest and taxes. |
| Margin | Profit as a percentage of the selling price. |
| Markup | Profit as a percentage of the cost. |
| Fixed costs | Costs that stay about the same no matter how much you sell, like rent. |
| Variable costs | Costs that rise and fall with each unit sold, like materials. |
| Contribution margin | Price minus variable cost: the part of each sale that covers fixed costs. |
| Break-even point | The sales level where total revenue equals total costs, so profit is zero. |
| Cash flow | The timing of money moving in and out of the business. |
| Working capital | Short-term assets minus short-term debts: the cushion for day-to-day bills. |
| Overhead | Ongoing costs of running the business that are not tied to one product. |
| Asset | Something the business owns that has value, like cash, equipment or inventory. |
| Liability | Money the business owes to someone else. |
| Equity | The owners' share: assets minus liabilities. |
| Balance sheet | A snapshot of assets, liabilities and equity on one date. |
| Income statement | A report of revenue, costs and profit over a period of time. |
| Inventory | Goods on hand that the business plans to sell. |
| Accounts receivable | Money customers owe you for things already delivered. |
| Accounts payable | Money you owe suppliers for things already received. |
| Bootstrapping | Growing a business with your own money and sales instead of outside investors. |
| Valuation | An estimate of what a whole company is worth. |
| Dilution | When new shares are issued and each existing owner's percentage shrinks. |
| Sole proprietorship | A one-owner business with no legal separation between owner and business. |
| LLC | Limited liability company: a structure that usually shields owners' personal assets from business debts. |
| EIN | Employer Identification Number: a federal tax ID number for a business, issued free by the IRS. |
| DBA | Doing business as: a registered trade name that differs from your legal or company name. |
| APR | Annual percentage rate: the yearly cost of borrowing, including some fees. |
| Compound interest | Interest earned on both your original money and the interest it already earned. |
| Index fund | A fund that tries to match a market index instead of picking individual winners. |
| Diversification | Spreading money across many investments so one loss hurts less. |
Quick quiz
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Educational content only, not financial, tax or legal advice.
Sources
- Wikipedia: Markup (business)
- Wikipedia: Break-even point
- IRS: Get an employer identification number
- SBA: Choose a business structure
- SBA: Register your business
Facts on this page were checked against these sources (updated Oct 1, 2026). Spot an error? Email hello@fireempireshop.com.
