Plain Words

Money coming in and going out over time. Good cash flow means you can pay your bills on time.

Gross is all the money you took in. Net is what's left after costs.

Margin is the share of the price you keep. Markup is how much you add on top of your cost.

Monthly recurring revenue. Money you can count on every month, like memberships.

The customer has 30 days to pay after the invoice date.

Costs you pay no matter how much you sell, like rent, phone and insurance.

Return on investment. Did the money you spent bring back more than it cost?

All the money that comes in from sales, before costs.

What's left after you pay all your costs.

The point where sales cover all your costs, with nothing lost and nothing gained.

Fixed costs stay the same each month. Variable costs go up or down with how much you sell.

A bill you send to ask for payment.

Proof that a customer paid.

Part of the price paid up front, before the work starts.

Business to business. You sell to other businesses.

Business to customer. You sell to everyday people.

A guess of the price before the work is done. It can change.

Wholesale is selling in bulk to other businesses. Retail is selling to the person who uses it.

Tax added to some things you sell. The rules depend on your state and what you sell.

Employer Identification Number. A tax ID for your business from the IRS (Internal Revenue Service). It's free.

A tax form a business sends to a contractor it paid above a set amount in a year.

A form a contractor fills out so the business that pays them has their tax ID.

You and the business are the same, with no separate company.

Limited liability company. A business set up so your personal things are kept apart from business debts.

"Doing business as." A business name that's different from your legal name.

Writing down every dollar in and out, so you always know where you stand.

The goods you have on hand to sell.