Whether you are just starting out in business or you are a well established. There are business finance terms that everyone should know. It is important to know the lingo of business in order to be successful. Now, there are countless business finance terms but for this blog, we have chosen what we see as the top 13 vital business finance terms.
Bookkeeping is the process by which you keep a record of all your incoming and outgoing expenses. This is vital information, as it gives you an overview of your business and can help you at tax time.
If you don’t know how much your business is worth, then you are not a very good business person. The term Capital is used to reference the overall wealth of your business. It is an indication of the current and future success of your business.
3. Gross Profit
This is the term used to highlight the actual worth of the business minus expenses.
Depreciation is the record of assets and their loss in value over a period of time. Depreciation is a good way to decrease values of assets and allows you to get tax breaks on depreciated and replaced assets.
5. Intangable Assests
An asset that is not physical, such as intellectual property.
6. Profit/Loss statement
Profit/Loss statements are used to keep track of the business expenses.
Liabilities come in the form of liabilities or monies owed now, or in the future. Liabilities include wages, taxes, supplies bills ect.
8. APR (Annual Percentage Rate)
This is the amount of money each year you have to pay in interest on top of the principal balance on a loan.
Bankruptcy is the legal process that a business goes through, after they have gone broke, or are on the verge of. When your business fails, there is bankruptcy protections in place to protect you, and any creditors you may have.
This is any asset or securities you pledge to surrender if you default on a loan.
11. Fixed Interest Rates
This is a fixed amount of interest on a loan. A fixed interest rate never changes throughout the lifetime of a loan.
12. Floating Interest Rates
Floating interest rates change with market fluctuations. This may not always be to your advantage. Rex Burgdorfer is an authority on the market and always has vital information. Check him out by searching Rex Burgdorfer Crunchbase or Rex Burgdorfer Twitter.
When you have low capital, or a low credit score, it is sometimes a requirement that you have someone who has good credit and a sound amount of capital to vouch for your ability to pay your bills. If you default on the loan, then your guarantor will be obliged to pay what is owed.
There are many more terms but, the ones mentioned in this article are, in our opinion, the most vital business financial terms to know. For more great business advice, check out a finance authority, Rex Burgdorfer Crunchbase or Rex Burgdorfer Twitter