We've curated this glossary to provide clear definitions and explanations of key terms, acronyms, and concepts relevant to small business operations.

Welcome to Our Small Business Glossary!

In this comprehensive resource, we aim to demystify the complex world of small business terminology.

Whether you're an aspiring entrepreneur or a seasoned business owner, navigating the language of business can be overwhelming. That's why we've curated this glossary to provide clear definitions and explanations of key terms, acronyms, and concepts relevant to small business operations.

From financial jargon to marketing terminology and legal terms, our glossary is designed to empower you with the knowledge and understanding needed to thrive in today's competitive business landscape. Whether you're looking to brush up on your business vocabulary or seeking clarification on specific terms, our Small Business Glossary is your go-to reference.

Explore our user-friendly entries and unlock the power of business knowledge to gain a competitive edge and drive your entrepreneurial success.

Business Owner reviewing business glossary



Accounts Payable (AP): Debts owed by the business to suppliers or vendors.

Accounts Receivable (AR): Money a business has the right to after providing a customer with certain goods and/or services.

Accrual Accounting: An accounting method that recognizes revenues and expenses when earned or incurred, disregarding if it has been received or paid.

Action Plan: A strategy for handling a sudden challenge or meeting goals.

Assets: Resources owned by a business with economic value, such as cash, accounts receivable, inventory, equipment, and property.

Asset Turnover: A ratio used to help measure a company's performance. It is company's sales divided by the total value of its assets. A high ratio is a representation of good performance.


Balance Sheet: A snapshot of a business's assets, liabilities, and shareholder's equity at a point in time, creating an overview of the financial health of the company.

Bookkeeping: The process of recording, organizing, and managing financial transactions and records of a business.

Brand: A marketing identity business owners use to make to consistently represent their company and attract consumers. Branding facilitates marketing and customer loyalty.

Brand Equity: The approximate value and contribution to a company's profitability coming from having a recognizable name, logo, and reputation compared to competitors.

Break-even Point: The point at which total revenue equals total expenses, resulting in neither profit nor loss.

Business Plan: A document that outlines a company's goals, strategies, and financial projections. It serves as a roadmap for the business and is often required when seeking financing.


Capital Asset: Non-liquid property owned by a business, not inventory. Used for operations instead of sale. Examples: company cars, office computers, retail storefronts.

Cash Accounting: An accounting method that Records revenues/expenses when cash is received/paid. This method focuses on actual cash transactions and may not provide a comprehensive view of a business's financial position.

Cash Flow Forecast: A projection of future cash inflows and outflows to determine the availability of cash and anticipate potential shortfalls or surpluses.

Cash Flow: The movement of cash in a business. Positive cash flow means more money is coming in than going out. In contrast, negative cash flow indicates more cash going out than coming in.

Chart of Accounts: A categorized list of all accounts used in a business's accounting system, typically including assets, liabilities, equity, revenue, and expenses.

Collateral: Assets used as a loan guarantee. When taking out a loan for something such as a new building, the loan agreement may state that your personal or business assets can be used for collateral if you fail to make payments.

Collection Periods: Represents a business's average time to collect a debt.

Competitive Analysis: Evaluating competitors' strengths and weaknesses compared to one's own. It informs marketing strategies, risk assessment, and investment decisions in a company's financing and planning.

Contractor: Individuals or businesses hired to contribute to project completion. They are not regular employees of the project-running company, but rather engaged for specific tasks that support overall success.

Cooperative (Co-Op): A collective of individuals working together to achieve shared goals and address company needs.

Copyright: This legal document grants business owners and entrepreneurs the right to use and/or distribute products without worrying about reproduction.

Corporation: A legal entity formed under the laws of Canada, allowing businesses to operate as separate entities from their owners. It provides limited liability protection to shareholders and enables the company to engage in various commercial activities. It must adhere to Canadian corporate laws, maintain proper corporate governance, file annual reports, and pay taxes. The corporation's ownership is represented by shares, and its structure typically includes a board of directors responsible for decision-making and management oversight.

Cost of Goods Sold (COGS): The direct costs involved in producing or acquiring retail products, encompassing expenses for materials and labor incurred by a company during development, acquisition, or manufacturing.


Debt Financing: Utilizing repayable funds to fuel company expansion, with small business loans and interest-bearing loans as prevalent examples. It introduces financial risk through new fixed costs.

Depreciation: The systematic allocation of the cost of a tangible asset, such as equipment or machinery, over its useful life. It reflects the decrease in the asset's value over time.

Digital Nomad: A person working remotely or freelancing, usually while travelling.

Direct Marketing: Advertising and selling products directly to consumers, bypassing retailers or platforms. Sales channels include internet, mail order, phone calls, and face-to-face interactions.

Double-Entry Bookkeeping: A bookkeeping system that records each transaction with equal debits and credits, ensuring that the accounting equation (Assets = Liabilities + Equity) remains balanced. This system helps maintain accuracy and prevents errors in the books.


Earnings: Company's income, reflecting profitability from Gross profits, EBIT, or other analyses. Also measured as profits per share of a company’s stock.

Earning Before Interest and Taxes (EBIT): Evaluates company revenue, considering all expenses except interest and income tax. It serves as an alternative measure to Gross Profits, providing insight into company performance and attracting potential investors.

Employee (Part/Full time): An individual who works for a business under an employment contract (as opposed to a non-permanent labour contract — see Contractor).

Equity: The ownership interest in a business, often called net assets or shareholders' equity. It represents the residual interest after deducting liabilities from assets.

Equity Financing: Business owners and entrepreneurs sell ownership shares to investors, raising funds for company growth. It creates shareholder obligations (such as dividends) but avoids debt obligations.

Expenses: The costs incurred to operate a business, including overhead costs, salaries, rent, utilities, and supplies.


Financial Statements: Reports offering details on a business's financial performance and position, encompassing the income statement, balance sheet, and cash flow statement. They provide comprehensive insights into the company's financial health.

Fiscal Year: A 12-month period utilized for accounting and financial reporting purposes in a business. It may not align with the calendar year and is determined based on the company's specific accounting practices.

Fixed Cost: Expenses that remain constant irrespective of production or output levels. Examples include insurance, rent, and loan payments, which do not fluctuate with changes in business activity.

Fixed Liabilities: Typically long-term debts (e.g., mortgages, business loans) with durations exceeding one year, representing obligations for an extended period.

Future Value Calculator: A formula used to estimate how an asset or cash investment price will change over time.


General Ledger: Comprehensive log of a business's financial transactions, categorized by accounts, including assets, liabilities, revenue, and expenses. It serves as a central repository for recording and tracking financial activities.

Gross Profit: Total earnings of a company before deducting operating expenses, taxes, and other costs. It reflects the profit generated solely from revenue without accounting for operating expenses.

GST/HST: Goods and Services Tax (GST) or Harmonized Sales Tax (HST) is a consumption tax charged on the many goods and services in Canada. Businesses collect and remit this tax to the government as part of their commercial transactions.


Harmonized Sales Tax (HST): A value-added tax system implemented in some provinces of Canada. The HST combines the federal Goods and Services Tax (GST) with the provincial sales tax to create a single, harmonized tax rate. This tax applies to the majority of goods and services consumed within these provinces and is collected by businesses on behalf of the government. The specific rates and regulations associated with the HST vary among provinces that have adopted this tax system. It aims to streamline tax administration and create consistency in tax treatment across different jurisdictions within Canada.


In the Red: Refers to a company experiencing financial losses, where expenses exceed earnings. Essentially, the company is operating at a deficit or losing money rather than generating profits.

In the Black: Describes a company being deemed "profitable." It signifies that the balance between production and spending results in positive earnings and financial success.

Income Statement: A financial document that summarizes a business's revenues, expenses, and net income or loss over a specific period, often referred to as the profit and loss statement (P&L).

Intellectual Property (IP): In a business context, IP represents an entrepreneur's exclusive rights to a particular idea or creation, emphasizing ownership and legal protection.

Inventory: The complete record of current assets listed on a company's balance sheet. When small businesses conduct inventory checks, they tally all unsold products awaiting sale.

Inventory Turnover: A metric that quantifies how frequently a company sells or utilizes its products, represented by the ratio of sales or usage to inventory quantity.


Joint Venture: A business arrangement in which two or more parties come together to undertake a specific project or business activity. Each party contributes resources and shares the risks, costs, and rewards associated with the venture.

Joint Liability: When two or more individuals or entities are held legally responsible for a debt, obligation, or liability. In case of non-payment or default, all parties can be pursued for the full amount.

Job Costing: A cost accounting method used to track and allocate costs to specific jobs or projects. It helps determine the profitability of individual jobs and provides insights for pricing, budgeting, and resource allocation.


Key Performance Indicators (KPIs): Quantifiable metrics used to measure the performance and progress of a business. KPIs are specific to the goals and objectives of the company and are often used to track performance against targets.

Knowledge Management: The process of capturing, organizing, and sharing knowledge and information within a business to improve efficiency, productivity, and decision-making. It involves the creation of systems, tools, and processes to facilitate knowledge sharing and collaboration.


Labour: Engaging in a physical or mental activity that produces a product, good, or service.

Liabilities: Debts or obligations that a business owes to external parties, such as loans, accounts payable, or accrued expenses.

Limited Liability Company (LLC): A business entity that blends the liability protection of a corporation together with the flexibility and tax advantages of a partnership. Offering personal liability protection for its owners (members) while allowing pass-through taxation and operational flexibility.

Liquid: Refers to assets readily convertible to cash or held in the form of cash itself. Liquidity gauges a company's cash availability or cash flow, ensuring its ability to meet financial obligations.

Long-Term Assets: Refers to assets in business that are not expected to generate cash profits within the initial year. They encompass properties or investments held for an extended duration for purposes other than immediate financial gain.

Loyalty Program: An incentive scheme created to reward customers for their ongoing support, offering savings on new products and other exclusive benefits tailored to the company.


Marketing: The activities involved in promoting and selling products or services, including market research, advertising, branding, and customer acquisition.

Market Density: The measure of potential clients interested in a company's product or service, represented by a specific number or concentration within a given market.

Market Share: The portion of total sales that represents a company's earnings within a specific market context.

Marketing Audit: The assessment of a company's marketing assets, strategies, and areas for enhancement. It is performed periodically and at the beginning and end of marketing initiatives to evaluate performance and identify opportunities for improvement.

Mission Statement: A formal declaration summarizing a company's core values and overall goals.


Net Cash Flow: The residual amount after subtracting a company's total cash outflows from its inflows. It represents the final balance of cash remaining.

Net Profit: The remaining profit after deducting all expenses, including COGS, operating expenses, taxes, and interest.


Occupational Health and Safety (OH&S): The aim of OH&S legislation is to safeguard workers against workplace hazards. It establishes the rights and responsibilities of employers, supervisors, and workers. The law holds both workers and employers accountable for maintaining safety in the work environment.  

Outsourcing: Entails acquiring goods or services from external vendors, commonly employed by small businesses for contract work. However, the term is occasionally used interchangeably with offshoring, which involves outsourcing labor to foreign countries.


Pageviews: Represents the count of visits made by clients or users to a company's website, indicating the number of times web pages are viewed.

Partnership: A business structure where two or more individuals share ownership and responsibility for the business. Patent: A legal certificate conferring on a business or entrepreneur the exclusive right to market or sell their product to consumers, albeit for a restricted duration.

Payroll: The process of calculating and disbursing wages or salaries to employees, including deductions for taxes, benefits, and other withholdings.

Payroll Burden: Quantifies the company's real labour cost for each employee. The documents include liability costs for the company, the hourly wage/salaries, and any voluntary benefits paid (health insurance, pensions, etc.).

Profit and Loss Statement (P&L): Refers to a financial statement summarizing the revenue, costs, and expenses incurred during a specific period, providing information about a company's profitability.


Quick Ratio: Also known as the acid-test ratio, the quick ratio is a financial ratio that measures a company's ability to pay off its short-term liabilities using its most liquid assets. It excludes inventory from the calculation, focusing on cash, cash equivalents, and accounts receivable.

QuickBooks: A popular accounting software developed by Intuit that is widely used by small businesses for bookkeeping, invoicing, payroll, and financial management. QuickBooks provides a range of features and tools to help small businesses maintain accurate and organized financial records.


Remote Work: Carrying out job responsibilities, typically from a home setting, eliminating the requirement to commute to a centralized workplace, such as an office building.

Return on Investment (ROI): An indicator of investment profitability, determined by dividing the net profit by the initial investment and presenting it as a percentage. It gauges the financial return derived from an investment.

Revenue: The earnings generated through the sale of products or services. It represents the total income derived from business operations.


Shareholder: Individuals or organizations holding a portion of equity ownership in a company, typically in the form of stocks. Shareholders may have voting rights, receive dividends, exert influence on the company to varying degrees, or assume responsibilities for its management based on the ownership structure.

Shares: Issued as part of Equity Financing, they represent a distinct form of equity ownership in a company. Stock prices indicate the value of an individual share unit within the company.

Silo: An organizational mentality where departments or individuals within a company resist sharing information, goals, priorities, or metrics with one another. This leads to independent operations within the corporation, limiting collaboration and synergy.

Sole Proprietorship: A business structure where an individual owns and operates the business, assuming all legal and financial liabilities.

Stock: A general term used to describe ownership in the form of equity in a company. It represents a share or portion of ownership interest that an individual or entity holds in the company.

Stock Market: The public marketplace where financial equity investments are traded among investors. It serves as the platform for buying and selling stocks and other securities.

Stock Turnover: A term commonly used to describe the number of times an inventory has been sold or used within a certain period.


Tax Deductions: Expenses or costs that can be subtracted from a business's taxable income, reducing the tax owed. Common deductions include business expenses, depreciation, and interest payments.

Tax Status: The designation chosen by a business owner or entrepreneur when filing taxes, determining the applicable tax rules and regulations. Similar to individuals filing as single, married, or married but separately, businesses can opt to file as a corporation, limited partnership, or LLC, among other options.

Trademark: Within the business context, a trademark is a visual symbol or word employed to represent a company's brand identity. It can also be utilized to establish recognition for a company's new product in the market.

Trial Balance: A list of all the general ledger accounts with their respective debit or credit balances, used to ensure that debits and credits are equal and to detect errors in the accounting records.


Unique Selling Proposition (USP): A unique characteristic or feature of a product, service, or business that sets it apart from competitors and gives it a distinct advantage in the market. The USP is often used in marketing and branding to communicate the value proposition to customers.

Upselling: The practice of encouraging customers to purchase additional or upgraded products or services that complement their original purchase. Upselling aims to increase the average transaction value and customer satisfaction while providing additional value to the customer.

Unit Cost: The cost incurred to produce or acquire a single unit of a product or service. Unit cost is calculated by dividing the total cost of production or acquisition by the total number of units produced or acquired.

Unsecured Loan: A loan that is not backed by collateral or assets. Unlike secured loans that require collateral (such as a property or vehicle), unsecured loans are granted based on the borrower's creditworthiness and ability to repay.

Utilization Rate: The percentage of time or capacity that a resource, such as equipment, employees, or production facilities, is being utilized or actively used. Utilization rate is often used to measure and optimize resource efficiency and productivity.

Undercapitalization: A situation in which a business does not have enough capital or financial resources to operate effectively, meet its obligations, or support its growth. Undercapitalization can result in financial difficulties, limited investment in necessary resources, and hindered business expansion.


Variable Cost: Typically fluctuating in proportion to the volume of units produced by a company or small business. These costs tend to increase as production rises and decrease as production declines.

Venture Capital: VC typically entails substantial investments as high as millions of dollars, accompanied by considerable risk. This is because the targeted companies may be unproven in the market or involved with innovative technologies.

Venture Capitalist: These are investors, individuals and organizations who finance newer or smaller businesses (with Venture Capital) before they are publicly traded or before the target companies have access to other forms of equity.


Working Capital: The difference between a company's assets and liabilities. It represents the funds available for day-to-day operations.


XML (eXtensible Markup Language): A markup language commonly used for structuring, storing, and transmitting data over the internet. XML allows businesses to define their own custom tags and data structures, making it flexible for representing and exchanging information between different systems.


Year-end: The end of a fiscal or calendar year, which marks the completion of a business's financial reporting period. Year-end is an important time for businesses to assess their financial performance, prepare financial statements, and fulfill tax obligations.

Yield: In the context of investments, yield refers to the income or return generated by an investment, typically expressed as a percentage. Yield can come from interest, dividends, or capital gains and is an important factor for evaluating the profitability of investments.

Year-over-Year (YoY): A comparison of a particular metric or performance indicator for one year against the same period in the previous year. Year-over-year analysis helps businesses track growth, identify trends, and evaluate their performance over time.

YTD (Year-to-Date): YTD refers to the period from the beginning of the current calendar year or fiscal year up to the present date. YTD figures are commonly used in financial reporting to track and analyze performance within a specific timeframe.


Zero-based Budgeting: A budgeting approach where every expense must be justified and approved from scratch for each budgeting period, regardless of whether it was included in the previous budget. Zero-based budgeting helps ensure that all expenses align with current business needs and goals.

Gain the Competitive Edge with

Competitive Edge Business Solutions!

Don't let bookkeeping challenges hinder your business's growth potential. With Competitive Edge Business Solutions, you can focus on what you do best while we handle your financial records with precision and expertise.