Top 15 Bookkeeping & Financial Terms Every Small Business Owner Should Know

If you're a small business owner trying to stay on top of your finances, chances are you’ve Googled terms like “chart of accounts,” “cash flow,” or “how to reconcile in QuickBooks.”

Understanding the basics of bookkeeping doesn’t just help you stay organized—it helps you make smarter decisions and keep more of your profits.

Here are 15 of the most searched financial terms and what they actually mean:

1. Bookkeeping – The process of recording and organizing a business’s financial transactions.

2. Accounts Payable – Money your business owes to vendors or suppliers.

3. Accounts Receivable – Money customers owe your business.

4. Cash Flow – The movement of money in and out of your business.

5. Profit and Loss (P&L) – A financial report showing revenue, expenses, and profit over time.

6. Balance Sheet – A snapshot of your business’s financial health including assets, liabilities, and equity.

7. Chart of Accounts – A list of categories used to classify financial transactions.

8. Reconciliation – Matching transactions in your accounting software to your bank or credit card statements.

9. Depreciation – A method of allocating the cost of a long-term asset over its useful life.

10. Business Deductions – Expenses that can be subtracted from income to reduce taxable income.

11. Owner’s Draw – Money the business owner takes out for personal use in a sole proprietorship or single-member LLC.

12. Payroll – The process of paying employees and handling taxes and deductions.

13. 1099 Contractors – Independent workers paid $600 or more who must receive a 1099 form at year-end.

14. Tax Liability – The total amount of taxes owed to the IRS.

15. QuickBooks Online (QBO) – A cloud-based accounting platform widely used by small businesses.

Mastering these terms helps you feel confident and stay compliant. Inside the DBR Bookkeeping Online Community, we break these down in simple, practical ways—through videos, Q&A calls, and ongoing support.

Join the DBR Bookkeeping Online Community to learn more:
https://www.skool.com/dbr-bookkeeping-8561/about

Let’s start Doing Business Right!

FAQ: Bookkeeping Terms for Small Business Owners

What is the chart of accounts in QuickBooks?
It’s a list of categories for organizing income, expenses, assets, and liabilities.

Why is reconciliation important?
It ensures your books match your actual bank activity and helps spot errors or fraud.

What’s the difference between P&L and a balance sheet?
A P&L shows profitability over time. A balance sheet shows your financial position at a specific point.

Do I need to use QuickBooks for bookkeeping?
It’s highly recommended. QBO is user-friendly and ideal for small businesses.

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