Running a Business Glossary

Running a Business Glossary

Financial records, where business transactions are entered using double entry book-keeping principles.

Items owned by a business.

A form of non-recourse financing for exporting use. Avalising is a simple form of a bill of exchange, allowing a business to import goods from an overseas supplier on extended credit terms not normally on offer. Avalising is a form of guarantee; to ‘aval’ is to endorse a bill of exchange or promissory note.

The balance sheet shows the state of a business, or other organisation, at one particular point in time, i.e. the close of business on the date to which the accounts are prepared. The balance sheet is divided into two parts – part 1, the statement of total net assets, shows the net total value of everything the business owns less everything it owes – in theory, how much the business is worth. Part 2, the statement of source of finance, shows how the assets listed in part 1 have been paid for.

The amount of the owner’s stake in a business.

A tax charged on profits from the disposal of assets, unless the disposal is in the course of trade when the profit will be taxed as income.

Summarises a business' daily receipts and payments, and contains the method of payment and names of the parties concerned with each transaction. These transactions can be cash, cheque, standing order, direct debit or credit card. The left-hand pages of a cash book records money coming in – sales, while the right-hand pages shows the money paid out – purchases.

When businesses are preparing budgets for the profit and loss account, a cash flow forecast is often prepared at the same time. This will show the expected movement of cash in and out of the business and will include capital expenditure, loan repayments, tax payments, etc., as well as receipts and payments relating to the profit and loss account. The cash flow forecast will usually show the bank balance at the end of every month and will indicate if additional funds are going to be required by the business at any time.

A company established to trade for the good of the community. The main feature that separates this type of company from any other is the ‘asset lock’, which means that the assets and profits of the company must be permanently retained and used solely for the benefit of the community.

These regulations cover almost every workplace from offices, where hazardous substances such as solvents in correcting fluids and chemicals used in photocopier toner are used, to factories where any number of substances covered by the regulations may be used or produced.

Tax levied on profits of limited companies.

A sum of money claimed or awarded as compensation by a court or tribunal.

The Data Protection Act governs the protection of personal data in the UK.

Fixed assets, such as fixtures and fittings, motor vehicles and plant machinery, which will wear out in time. Depreciation is an accountant’s estimate of how much this property of the business has worn out during the period covered by the accounts.

The debiting and crediting of accounts.

Businesses are legally required to take out employers’ liability cover to protect them against claims from employees that arise from personal injury or death sustained at work or in the course of their employment. 

The costs of running the business on a day-to-day basis (e.g. wages, rent, telephone, etc.).

A record of a premises’ fire risk; where five or more people are employed, the fire risk assessment has to be recorded in writing.

Records information regarding fire safety.

A form of non-recourse financing for exporting use. Involves bills of exchange, promissory notes or deferred letters of credit. A business can discount these instruments to a forfaiting company and the risk of non-payment passes to it. Because these bills vary between 90 and 180 days, it’s not unknown for them to pass from one forfaiting company to another. 

A national independent watchdog for work-related health, safety and illness. The HSE is an independent regulator and acts in the public interest to reduce work-related death and serious injury across Great Britain’s workplaces.

Businesses that employ staff need a health and safety policy concerning those aspects of the law affecting their type of business. The employees must be kept up to date and involved with the health and safety procedure. The health and safety regulations applicable to the type of business must be displayed for all to see.

A co-operative enterprise which two or more businesses enter into together. The businesses, on creation of a joint venture, may form a separate corporation or business partnership. But businesses can retain their own individuality while entering into a joint venture agreement and this can be operated as a separate entity altogether.

An investment company that invests its shareholders' money in business start-ups.

The three sections into which accounts are traditionally divided: sales, purchases and general.

Items owed by a business.

The limitation period is the time window in which claimants can bring a claim  In employment matters the limitation periods to bring a claim to an employment tribunal are far shorter than the County Court and other types of civil claims.

Insurance cover protecting a business' stock and equipment against dangers such as fire, flood, storm, burst pipes and other specified causes.

Also called ‘executive summaries’ and best described as a vision of a business. Business owners use mission statements to outline their business aims which also take into their personal objectives.

Provides cover for any legal liability arising from claims against a business from members of the public for bodily injury or damage to their property from goods supplied, serviced, tested or repaired by the business or its staff.

Offers cover for legal liability for professional errors and omissions made while running a business. Also covers employees of the business.

The excess of income over expenses made by a business from selling goods during a particular time period.

A financial statement that lists the money that a business has received (or is due to receive) during the period covered by the accounts and, from them, deducts the money the business has paid out (or has been due to pay out) during the period (expenditure). The difference is the profit or loss.

Protects a business against legal action taken by members of the public (not employees) that arise from any business activities.

The record of a company's daily purchases.

The Reporting of Injuries, Diseases and Dangerous Occurrences Regulations 1995 (RIDDOR) place a legal duty on employers, self-employed people and people in control of premises to report work-related deaths, major injuries or over-three-day injuries, work related diseases and near miss accidents.

The record of a company's daily sales.

The Small Firms Loan Guarantee (SFLG) scheme is available to small and medium-sized businesses and start-ups and is a joint venture between the Department of Trade and Industry and a number of approved lenders. If someone has a viable business idea that requires funding, but is unable to access normal lenders due to a lack of suitable assets to offer as security, then the SFLG helps to overcome this problem by providing lenders with a government guarantee against default.

See Limitation.

Manufacturers and retailers producing or selling electrical and electronic goods must comply with the Waste Electronic and Equipment Directive (WEEE), which states that measures must be introduced to allow customers to return items for disposal.

The total of current assets less current liabilities. It’s a net total thrown up within the balance sheet and, in crude terms, if fixed assets form the engine which runs the business, working capital is the fuel of that engine.

Liked this Glossary?

Share |

301 Legal Forms, Letters & Agreements

301 legal forms advert

301 Legal Forms, Letters and Agreements contains a legal form for practically every home and business need.

Read More

Book-Keeping Made Easy

Book keeping guide advert

Book-Keeping Made Easy: a guide to book-keeping for new business start-ups. 

Read More