Whether you’re a small business owner in Kent, a sole trader in Canterbury, or just trying to get your head around your personal finances, accountancy terminology can sometimes feel like a foreign language. At Soldi Partners Accounting, we believe in clear communication — and that starts with helping you understand the terms we use every day.
Here’s our jargon-free guide to the most common accountancy terms, so you can feel more confident in conversations with your accountant (and maybe even impress your friends at the pub).
1. Turnover
What it means: Your business's total income from sales before any costs are taken off.
Think of it as: Your business’s “headline” revenue — not the profit, just the money coming in.
2. Profit (and Loss)
What it means: The money your business makes (or loses) after subtracting expenses from income.
Profit = Income – Expenses
Tip: There are several types of profit, like gross profit (before overheads) and net profit (the final bottom line).
3. Balance Sheet
What it means: A snapshot of your company’s financial position at a specific point in time.
Includes: What you own (assets), what you owe (liabilities), and what’s left for you (equity).
4. Assets
What it means: Things your business owns that have value — such as equipment, property, or cash in the bank.
Bonus tip: Assets can be fixed (long-term, like buildings) or current (short-term, like stock or receivables).
5. Liabilities
What it means: Debts or financial obligations your business owes — like loans, credit cards, or unpaid invoices.
Capital
What it means: The money you or other investors have put into the business. It’s also what’s left if all debts were paid.
7. Depriciation
What it means: The reduction in value of an asset over time, usually due to wear and tear.
Example: A van used in your business loses value each year — that’s depreciation.
8. Dividend
What it means: A payment made to company shareholders from the business’s profits.
Important for: Company directors who pay themselves partly through dividends.?
9. PAYE (Pay As You Earn)
What it means: A system for collecting income tax and National Insurance from employees’ wages.
Employers: You’re responsible for calculating and submitting PAYE to HMRC.
10. Self Assessment
What it means: The system used by HMRC for individuals (like sole traders or landlords) to report their income and pay tax.
Deadline: 31st January each year for online submissions.
Why This Matters
Understanding basic accounting terms isn’t just about ticking boxes — it gives you more control over your finances, helps you ask better questions, and ensures you make informed decisions.
At Soldi Partners Accounting, we pride ourselves on speaking your language. If you're ever unsure about a term, just ask — no question is too small.
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