Business Owner Dictionary – Terms You Should Know!

As a business owner, you’re constantly navigating complex jargon, financial terms, and legal language that can feel overwhelming.

Whether you’re just starting out or already manage a successful business, understanding key business terminology is essential to making informed decisions and working effectively with professionals like your accountant, lawyer and financial planner.

We’ve broken down some of the most important terms every business owner should know (from one business owner to another):

Jump to: A | B | C | D | E | F | G | I | K | L | M | N | P | R | S | T | W

Business terms you should know!

Want to download our Business Owner Dictionary Ebook? Click the file below!

Accounts Payable

This is the amount of money your business owes to a vendor or supplier after receiving their goods and/or services.

Accounts Receivable

Accounts receivable is the amount of money your customer owes you for your goods and/or services they have used.

Appointor

The Appointor is the person or persons with the power to remove and appoint the trustee of a trust. It is common for the Appointor of a discretionary family trust to be one or both parents.

Asset

An asset is an owned resource by an individual, company or business that holds value.

Asset Allocation

Asset allocation is the process of managing risk and reward by investing your money in a range of assets and strategies.

Australian Business Number (ABN)

An ABN is an 11-digit number that identifies you or your business.

Australian Prudential Regulatory Authority (APRA)

The APRA is a statutory authority of the Australian Government and the prudential regulator of the Australian financial services industry. 

Australian Securities and Investments Commission (ASIC)

ASIC are a government body that operate as Australia’s corporate, markets and financial services regulator.

Australian Taxation Office (ATO)

The ATO manage the tax and superannuation systems in Australia.

Balance Sheet

A balance sheet is a financial document, showing a business’s current financial position. It usually shows the business assets, liabilities and equity.

Binding Death Nomination (BDN)

A BDN is a legally binding nomination that allows you to advise the trustee of your superannuation fund who is to receive your superannuation benefit in the event of your death.

Brand

A brand is a name, term, design, symbol or any other feature that identifies as a product, service or organisation that is distinct from other competitors.

Business Activity Statement (BAS)

A BAS is a form that businesses must submit to the ATO, outlining your taxes and payments. This can include the following payments: Goods and Services Tax (GST), Pay As You Go (PAYG) instalments and Fringe Benefits Tax (FBT) instalments.

Business forecasting

Forecasting involves making informed guesses about the future of the business, using past and present data and results.

Business plan

A business plan is a documented overview of your business and its strategy including its goals, financial objectives and operations.

It is important to have a business plan so that you have a written outline of your business, its purpose and what you want to achieve with it. This gives you accountability to achieve your business objectives, provides direction and clarity to inform decision-making, and ensures all key people within the business are working towards a common goal, using consistent strategies and processes. 

You can download our Business Plan Template here.

Business to Business (B2B)

B2B is the transaction of goods and/or services between businesses.

Business to Consumer (B2C)

B2C is the transaction of goods and/or services between a business and consumer.

Your BAS is usually lodged either monthly, quarterly or annually. If you have a bookkeeper, they will do this for you.

Capital Gain

A capital gain is the increase in value of an asset when it is sold.

Capital Gains Tax (CGT) applies to gains you have made on the sale of capital assets (assets you make money from). Unless an exemption or reduction applies, or you can offset the tax against a capital loss, any gain you made on an asset is taxed at your marginal tax rate.

Cash Flow Statement

A cash flow statement shows how much money is coming in and how much money is coming out of a business. This can show how well the business is managing their expenses versus their revenue, and how much money is available at any given time.

Company

A company is a separate legal entity that sells goods and/or services to create a profit.

A company is different to a business as a company owner does not have the same legal obligations that a business owner does.

Concessional Contribution

Concessional contributions are contributions made into your superannuation fund that are included in the funds assessable income. These contributions are taxed in your fund at a ‘concessional’ rate of 15%, which is often referred to as ‘contributions tax’.

Contractor

A contractor runs their own business independently and they are often responsible for their own tax and superannuation obligations. They would:

• Pay Their Own Income Tax And GST Directly To The ATO.
• Source Their Own Clients (e.g. Through Advertising).
• Delegate Work To Others If They Choose Without Approval From Any Employers Or Managers.
• Be Responsible For Quoting Their Work, Including Setting Or Negotiating Their Own Prices.
• Invoice Their Work.
• Have A Separate Business Bank Account.
• Pay For Their Own Business Insurance (e.g. Public Liability).

Customer Relationship Management (CRM) Software

CRM software allows businesses to track and manage their relationships and interactions across the whole business.

Digital Marketing

Digital marketing involves marketing goods and/or services using digital means and communication such as social media, websites and email.

Director Identification Number (DIN)

A DIN is a unique number that a director will keep for life, much like a tax file number and use to identify them. It aims to trace a director’s relationships across companies, enabling better tracking of directors of failed companies and prevents the use of false identities and phoenixing.

Find out more here.

Employee

An employee works and is part of someone else’s business and their employer will withhold tax and pay superannuation for them.

Estate Planning

Estate planning involves preparing for what you want to happen to your assets and affairs when you pass away. It is also about having a back-up plan for who takes charge of your affairs if you lose capacity and can’t make sound decisions. 

Find out more here.

Executor

An executor is a person or institution appointed by a testator to carry out the terms of their will.

Financial Hardship

Financial hardship occurs when someone is unable to make repayments on debt they may have. For example, credit card or loan debt. People can experience financial hardship for a number of reasons including:

• Unemployment.
• Critical Illness Or Injury.
• Natural Disasters Such As Floods Or Bushfires.
• Rise In Cost Of Living And Rate Of Inflation.
• Business Cash Flow Issues.
• You Couldn’t Afford A Loan When You Committed To It (Or Can No Longer Afford It Due To The Reasons Above).

Financial Health Check

A financial health check operates in the same way as a regular health check, just for your business or individual finances.

It involves an assessment of your current and future finances and mapping out a clear strategy and actionable steps towards set business and individual goals.

Franking Account

A franking account records the amount of tax paid that a franking entity can pass on to its members as a franking credit via dividend.

Fringe Benefits Tax (FBT)

A fringe benefit is a ‘payment’ to an employee or an associate (an associate is someone related to you such as a spouse, child or even a friend), but in a different form to salary or wages.

A benefit might be as simple as hosting a work Christmas party, providing car parking, using a work vehicle, or providing the goods or services of the business at a reduced rate to what the public pay.

Goods and Services Tax (GST)

GST is an Australia tax valued at 10% that is added to the cost of most goods and services.

Income Statement (AKA Profit and Loss Statement)

An income statement shows the following aspects: revenue, costs, profit, expenses, losses and tax payments.

Instalment Activity Statement (IAS)

An IAS is a form used by taxpayers who are not registered for the GST. The IAS is also the form required to be lodged by entities that prepare a quarterly BAS but are required to remit their PAYG withholding tax monthly because they are a medium withholder (greater than $25,000 PAYGW per annum).

Intellectual Property (IP)

Your IP is any creation of your own, such as a new product or service, your unique business idea, a logo or branding, even written content. IP is an extremely valuable asset and needs proper legal protections in place.

A common way of protecting your IP is by registering a trademark. Trademarking gives you inbuilt exclusive rights if you produce or come up with something new so that others cannot infringe or use a it in an identical manner.

Key Performance Indicators (KPIs)

A KPI is a metric that measures how well a goal is being achieved.

Liability

A liability is an amount of money owed by a business at any given time such as a business debt.

Marketing

Marketing involves promoting and positioning goods and/or services to show their value to customers.

Find our top (cost-effective) marketing tools for small business here.

Market Research

Market research involves collecting information about potential markets and customers that you could sell a possible good or service to. It helps you understand your customer’s wants and needs, and what your competitors are currently doing.

Learn how to conduct market research here.

Non-Concessional Contribution

Non-concessional contributions are contributions made into your superannuation fund that are not included in the funds assessable income. The most common type is personal contributions made by the member for which no income tax deduction is claimed.

Partnership

A partnership involves two or more people running a business where they share ownership, legal responsibility and the profits.

Pay As You Go Withholding (PAYGW)

Employers collect pay as you go (PAYG) withholding amounts from payments made to employees and contractors, to help payees meet their end-of-year tax liabilities.

Pay As You Go Income Tax Instalments (PAYGI)

Pay as you go (PAYG) instalments is a system for making regular payments towards your expected annual income tax liability. It only applies to you if you earn business and/or investment income over a certain amount.

Need assistance with your PAYG instalments? Contact our Bookkeeping team here.

Profit Margin

A business’s profit margin is the amount left over after subtracting expenses from revenue.

Recipient Created Tax Invoices (RCTI)

An RCTI is an invoice issued by the recipient of the supply ‘on behalf’ of the supplier.

Reserve Bank of Australia (RBA)

The RBA is Australia’s central bank and are responsible for monetary policy and maintaining a stable economy.

Return on Assets (ROA)

ROA indicates how well a business is using their assets to generate profit.

Return on Investment (ROI)

ROI is the measure of how profitable an investment was. This is shown by looking at how much you paid for the investment and how much revenue was made from it.

Risk Management

Risk management involves identifying, evaluating and resolving any possible or present threats to the business.

Search Engine Optimisation (SEO)

SEO involves making your website more visible on search engines.

Self-Managed Superannuation Fund (SMSF)

ASMSF is a superannuation trust structure that provides financial remuneration to its members in retirement. The main difference between SMSFs and other superannuation funds is that SMSF members are also the trustees of the fund. SMSF’s can also provide greater investment choices for members such as investing in direct property.

Shareholder

A shareholder is an individual or company that owns shares in a company.

Side Hustle

A side hustle is work that you complete outside of your primary job to gain additional income.

Single Touch Payroll (STP)

STP is the direct reporting of salary and wages, PAYG withholding and superannuation contribution information to the ATO. It applies to all employers.

Find out more about STP here.

Small and Medium Enterprises (SMEs)

A SME is characterised by two factors:

• An annual turnover of less than $10 million
• Fewer than 200 employees

SMART Goals

When you set goals or objectives for your business, you should always ensure they’re SMART: Specific, Measurable, Achievable, Relevant and Timely.

Sole Trader

A sole trader is an individual who is legally responsible for the business.

Standard Form Contract

A standard form contract are agreements where the terms and provisions are in a form that the business reuses repeatedly. They are often presented on a ‘take it or leave it’ basis where the customer has little scope to negotiate its terms. 

Phone or credit card, and loan contracts are obvious examples, but services delivered under standard terms & conditions are also included.

Statement Of Account (SOA)

A SOA is a document outlining all transactions between a business and supplier or client in a specified time period. This can include past payments and money owed.

Strategic Plan

A strategic plan is a document stating the organisation’s objectives and goals, and how to achieve them using different resources.

Succession Planning

Succession planning allows you to identify the people within your organisation that are capable of stepping up and taking on big important roles. If a key member of your team leaves unexpectedly, a sudden scramble to search for candidates outside of the business won’t necessarily leave you with the best result. Instead, nurture someone within the business, who knows it from the inside out.

If you are entering into a partnership with someone, a succession plan will put procedures in place in case anything goes wrong.

Superannuation Guarantee (SG)

SG is the amount you have to pay your employees each time they get paid. This amount is usually 11% of an employee’s earnings and goes into their superannuation fund. 

Superannuation Guarantee Charge (SGC)

SGC is the fee you pay if you miss a superannuation payment. 

Superannuation Guarantee Charge (SGC) Statement

ASGC statement is a form that you complete and lodge before the quarterly deadline if you are going to miss a superannuation payment. 

Tax File Number (TFN)

A TFN is a unique, personal reference number for the ATO. You keep your TFN for your whole life, so it is important to keep it safe and ensure you’re the only one using it.

It is free to apply for one and you’ll need it to:

• Apply for government benefits or allowances.
• Lodge a tax return online.
• Apply for an Australian business number (ABN).

Trademark 

A trademark is a type of IP that protects words, logos, composites and slogans. For example, ‘Cadbury’ has trademarked the colour purple for the chocolate industry and ‘Nike’ has trademarked the slogan ‘Just Do It’.

For more on trademarks, click here.

Trustee

A trustee is a natural or legal person to whom property is legally committed to be administered for the benefit of a beneficiary (such as a person or a charitable organisation).

Trust Deed

A trust deed is a legal document that outlines the rules and objectives that govern a trust.

WorkCover

This is a compulsory insurance imposed upon employers who engage employees and common law employees.

WorkCover Remuneration Estimate

Remuneration includes the total benefits that an employee receives from their employer including wages, salaries and superannuation. Each year, this becomes rateable remuneration when it is included in your insurance premium calculation by WorkCover (AKA your estimate!).

Quick Abbreviations

COB – Close Of Business

EOD – End Of Day

EOFY – End Of Financial Year

FYI – For Your Information 

WFH – Working From Home

PFA – Please Find Attached  

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