Glossary
Accounting words, in plain English.
What the terms on your tax return, invoices and accounts actually mean, for UK sole traders and small companies.
A
- Accruals basisCounting income and costs when they're earned or incurred, not when cash moves.
- Aged debtors reportA list of who owes you money, grouped by how late they are.
- Annual Investment Allowance (AIA)Tax relief on the full cost of equipment in the year you buy it.
- Assets and liabilitiesWhat the business owns, and what it owes.
B
C
- Capital allowancesTax relief on things the business buys to keep and use.
- Cash basisCounting income when you're paid and costs when you pay.
- Cash flow forecastA prediction of money coming in and going out over the coming weeks.
- Class 2 National InsuranceA voluntary weekly contribution for the self-employed on low profits.
- Class 4 National InsuranceNational Insurance on self-employed profits.
- Companies HouseThe UK's register of companies.
- Confirmation statementA yearly check that Companies House has a company's details right.
- Construction Industry Scheme (CIS)HMRC's scheme where contractors take tax off subcontractors' payments.
- Corporation TaxThe tax limited companies pay on their profits.
- Credit controlMaking sure customers pay on time.
- Credit noteA document that reduces or cancels an invoice you've issued.
- CreditorSomeone the business owes money to.
D
- DebtorSomeone who owes the business money.
- DepreciationSpreading the cost of an asset over the years you use it.
- Director's loanMoney a director takes from, or puts into, their company that isn't salary, dividends or expenses.
- DividendA payment to shareholders from a company's profits after tax.
- DrawingsMoney a sole trader takes out of the business for themselves.