Small Business Lingo 101: Essential Terms to Know

Between creating your business concept, getting the word out, and managing your finances, the world of small business ownership can feel overwhelming. On top of everything else, you might be having conversations or getting emails filled with business terminology you’ve never heard or seen before. That’s why we’ve put together this comprehensive guide of essential terms to help you navigate through critical small business conversations.

Balance Sheet

A balance sheet is often one of your company’s most essential financial statements. A balance sheet includes a list of assets, liabilities, and owners’ or stockholders’ equity in the company. This includes everything from cash flow and inventory (assets) to expenses and taxes payable (liabilities). All together, a balance sheet summarizes the state of your business’ financial status, and is often a very useful tool for any investors or stakeholders.

Beneficial Owners

Are you being asked to list any beneficial owners of your company? Beneficial owners include all people who own or control more than 25% of your company’s shares or voting rights. Beneficial owners are only applicable to legally registered companies (e.g. LLCs, LLPs, LPs, etc.), so they’re not relevant for sole proprietors.

Bluetooth Light Energy (BLE)

Bluetooth is a type of wireless technology that connects two devices using radio waves. Today, Bluetooth is commonly used for wireless headphones and speakers, to connect your phone to your car stereo, and to connect your SumUp Card Reader to your phone or tablet. Fun fact: the name “Bluetooth” is a reference to King Harald “Bluetooth” Gormsson who was known for uniting Denmark and Norway in 958, and for his dead tooth, which was a dark blue/grey color.

Business Days (vs Calendar Days)

When talking to customers, you may find yourself saying “It’ll be ready for pickup in 3-4 days” or “We’ll get back to you in 1-2 days”. But when you have weekends and bank holidays, what does that timeline actually mean? “Business days” is the term used to describe the days that your business is open, excluding “weekend” days and public holidays. On the other hand, “calendar days” refer to every day of the week, Monday through Sunday.

Business Plan

A business plan is a map that anyone can use to understand where your business is going and why it'll succeed. Developing a business plan will tell you if your company is viable, and it will help act as a step-by-step guide to accomplishing your goals and making a profit. Learn how to write a killer business plan here.


Simply put, a chargeback is a transaction reversal that’s initiated by a customer. In comparison to a refund, a chargeback happens when the customer contacts their bank to file a dispute instead of contacting the merchant directly. The bank then forcibly removes the funds from the merchant’s account, thereby reversing the payment. Learn more about chargebacks here.

Costs of Goods Sold (COGS)

While managing your finances, you’re very likely to come across the acronym COGS. Standing for Costs of Goods Sold, this figure represents the total costs of producing the products you sell, including cost of raw materials, suppliers, shipping costs, labor and more. COGS does not take into account any operating expenses (e.g. rent, marketing costs, payroll), interest, or taxes.

Doing Business As (DBA)

Whether you’re a sole proprietor running a business under your name or you’re running an incorporated business, you may want to run your business under a different name than what’s legally registered. That’s where a DBA comes in. There are different requirements for filing a DBA based on your state, county, or city, so make sure to investigate the specific requirements for your situation. Keep in mind, registering a DBA name is not the same as filing for incorporation.

Employer Identification Number (EIN)

Your Employer Identification Number is an IRS-issued federal tax ID for a business. An EIN is also synonymous with your business’ Tax ID Number or TIN. Why is your EIN important? Think of it as the equivalent of a Social Security number for your business. Having an EIN enables you to open a bank account for your business, apply for licenses, file tax returns and more. Not sure if you need an EIN? Read more from the IRS.


EMV stands for Europay, Mastercard and Visa. However, today the term is used to reference any card with an electronic chip. EMV cards include a small computer chip that acts as an alternate payment method to the classic magnetic stripe. The chip stores client data and interacts with your POS system during a transaction to create a unique transaction ID. Read more about the shift to EMV.

Gross Profit

Take your business’ total earnings minus the cost of goods sold, and that’s your gross profit. Gross profit is usually one of the key factors in evaluating the success and health of a business, and should not be confused with the net profit.

Independent Contractor

An independent contractor is a person who does work for another business, but not as an official employee. If you are employed as an independent contractor, your wages paid will not have had income tax, Social Security, or Medicare taxes withheld from your total. 


An invoice is a legal document that lists all the goods or services a customer purchased, with the price they were purchased for. An invoice acts as proof of payment and helps you keep track of requested payments. Learn everything you need to know about invoices in our complete introduction guide.

Joint Venture

Simply put, a joint venture is an arrangement between two different people or businesses to create a new business (or expand an existing business). A joint venture can be useful when you’ve found a trustworthy partner who can help expand your reach and/or increase your revenue.

Key Performance Indicators (KPIs)

How can you measure the success of your business? Key Performance Indicators (or KPIs) are the specific metrics that can be used to determine progress against your goals. For example, some KPIs for your business might include market share, email sign-ups, new referrals, and gross profit!

Limited Liability Company (LLC)

A Limited Liability Company is a common registered business structure for small business owners. Depending on your business, there might be quite a few benefits to becoming an LLC, from liability protection to making it easier to secure financing. There are different LLC regulations per state, so make sure to check what the LLC process is based on your location.

Near Field Communication (NFC)

NFC technology uses radio wave tags to transmit data when two NFC-enabled devices are in close proximity, usually four inches or less apart. For example, think about your Bluetooth speaker, home WiFi network, or even your SumUp Card Reader. NFC mobile pay apps, such as Google Pay or Apple pay, use a method called emulation, where NFC allows the app to act "like" a credit card, without having a physical card present.

Net Profit

Whereas gross profit strictly takes into account the costs of goods sold, net profit also takes into account all expenses, including any operational expenses, interest and taxes. Net profit is another KPI that is often used to evaluate the health of a company and is important to consider when making business decisions.


If you’re planning to start a business alongside someone else, you’ll be creating a partnership. Limited partnerships (LP) and limited liability partnerships (LLP) are two examples of common partnership structures.

Point of Sale (POS)

In short, the point of sale is quite literally the location where a transaction takes place—the place where a merchant sells a product or service to a customer and accepts payments. POS systems are the hardware and software that supports these transactions, whether that’s a traditional cash register or SumUp's mPOS (mobile Point of Sale) system that runs entirely through a tablet or phone.


Receipts are proof of purchase for goods or services. A receipt generally includes the date and description of the item or service purchased. While an invoice is a request for payment, a receipt is confirmation that a payment has already been completed.

Secretary of State (SOS) Registration

Many states require businesses to register through their Secretary of State website. If you have a DBA or "fictitious name" that is different from your legal business name, you may also be required to register on the SOS website. SOS registration requirements can vary by business type and by location, so look into your state-specific requirements to learn more.

Sole Proprietorship

A sole proprietorship is an unincorporated business that is owned and run by one person, the owner. New business owners may prefer to start out as a sole proprietorship as there is little to no paperwork required to get started (make sure to double check for any licensing or industry-specific requirements).

Loved this article? Check out more tips and guides for your business:

Ariana Sverdlik