Building strong business credit is a foundational step for any small business owner who wants to access financing, favorable supplier terms, and safeguard their business’s financial health. When your enterprise has a solid business credit profile, you’re better positioned to secure loans or lines of credit, obtain favorable terms from vendors, and separate your company’s risk from your personal credit.

Revenue is the total money your business earns before any expenses are deducted. Profit, on the other hand, is what’s left after all costs — like payroll, rent, taxes, and supplies — are paid. In short: revenue is the top line, while profit is the bottom line on your income statement.

Net Profit—also called Net Income—is the amount of money your business actually keeps after paying all of its expenses. Think of it as your company’s true “bottom line.” It’s what’s left after you subtract operating costs, interest, taxes, and any other expenses from your total revenue.

Gross Profit is the money your business keeps after subtracting the cost of producing or delivering your products or services from your revenue. In simple terms: Gross Profit = Revenue – Cost of Goods Sold (COGS)

As a small business owner, your success isn’t just about sales or customer relationships — it’s about how well you understand your numbers. Financial literacy is the foundation of smart decision-making. Yet many business owners struggle to interpret their financials, spot red flags early, or confidently discuss money with their advisors.

If you run a small business, you’ve probably heard the term GAAP tossed around by accountants, lenders, or even your tax preparer. GAAP — Generally Accepted Accounting Principles — is the standard framework of rules and guidelines that ensure financial statements are consistent, comparable, and reliable.

Why it’s wrong: A write-off doesn’t mean the IRS pays you for business expenses. It simply reduces your taxable income, which lowers the amount of tax you owe. For example, if your business earns $100,000 and you have $20,000 in legitimate deductions, you’ll only be taxed on $80,000—not get $20,000 back.

When you buy a car for your business, new equipment, or even office furniture — those items don’t hold the same value forever. Over time, they wear out, lose value, or become outdated. That gradual loss in value is called depreciation.

Understanding your company’s balance sheet is one of the most powerful ways to improve your financial literacy and make smarter business decisions. Yet many small business owners glance at it once a year—if at all—when meeting with their accountant. Let’s fix that.

If you’ve ever nodded along in a meeting while someone dropped words like “EBITDA” or “working capital,” you’re not alone. Most business owners learn finance by fire — juggling cash flow, invoices, and tax deadlines before anyone hands them a Financial Glossary. But understanding a few key terms isn’t just about sounding smart — it’s about making sharper, more confident decisions that protect your bottom line. Let’s decode the language of Business Finance 101, one real-wor

Working Capital is the money your business has available to cover its short-term expenses — like paying bills, buying inventory, or meeting payroll. It’s calculated using a simple formula: Working Capital = Current Assets – Current Liabilities

Understanding your Owner’s Equity is one of the most fundamental steps toward mastering your business finances. Yet many small business owners can’t clearly define what it means — or how it affects their day-to-day decisions. Let’s break it down in plain English.

Accurate transaction categorization in QuickBooks Online (QBO) is the foundation of reliable financial tracking. Every income, expense, and transfer you record affects your financial reports, taxes, and business insights. When categories are inconsistent—or missing—you risk: Misstating profits and taxes Making poor budgeting decisions Losing time (and money) during tax prep or audits Proper QBO categories keep your books clean and your decisions data-driven.

A monthly financial audit isn’t just for big corporations—it’s how smart small business owners keep control of their cash flow, catch errors early, and stay compliant. By reviewing your books each month, you’ll spot red flags before they snowball into IRS headaches or cash shortfalls.

Forensic accounting is the practice of using accounting, auditing, and investigative skills to examine financial records for evidence of fraud, misconduct, or other irregularities. In simple terms, it’s “detective work” with numbers—combining traditional accounting with investigation to uncover the truth behind financial activities.

When you apply for a loan, the first thing lenders look at isn’t your sales pitch or your future projections—it’s your numbers. If your books aren’t in order, even the best business idea won’t get funded. That’s why preparing loan-ready financials is critical. Getting this right can save weeks of back-and-forth and increase your chances of approval.

The short answer: you should clean up your books at least as far back as the last tax year filed — and sometimes further if errors, missing records, or compliance issues exist. In many cases, a Backdated Clean-Up should cover at least two to three years, or the period necessary to ensure your financial history is accurate, compliant, and useful for decision-making.

Accrual accounting (also called the accrual method of accounting) records income when it’s earned and expenses when they’re incurred—not when the cash actually changes hands. In other words, if you send an invoice today but don’t get paid until next month, accrual accounting still records that sale today. Likewise, if you receive a bill for services this month but pay it next month, the expense is recorded when you receive the bill.

A QuickBooks Clean-up is the process of reviewing, correcting, and organizing your company’s financial records inside QuickBooks. Over time, errors can creep in—duplicate transactions, miscategorized expenses, missing reconciliations, or outdated vendor and customer accounts. A clean-up ensures your books are accurate, up-to-date, and ready for tax filings, financial reporting, or business decisions.

A payroll audit (sometimes called an employment tax audit) is typically triggered when the IRS or your state’s Department of Revenue suspects inconsistencies in how you’ve reported and paid payroll taxes. The most common red flags include mismatched wage reports, unpaid or late payroll taxes, misclassified workers, and large or unusual changes in reported payroll from one year to the next.