Accounting Terms Business Owners need to know

Accounting terms can sound like jargon to most people! As a small business owner, it is important to have a base understanding of key accounting terms, so that you can be confident in the language around your business’s finances.

We have rounded up and simplified a list of the most common accounting terms we think you should know below. An accountant (a trained professional who records, analyses and works with businesses to understand finances) will often use these terms in meetings with clients. Save this post and impress your accountant next time you see them!


Let’s first talk about the Accounting Equation. It’s the absolute foundation of all accounting.

ASSETS – LIABILITIES = EQUITY – both sides must balance out otherwise there has been a mistake in your accounting. Pretty simple concept? In theory, yes…

Here’s our round up of key terms:


ASSETS: are anything that your business owns. (Examples include machinery, property or cash)

BOOKKEEPING: is the process of recording financial transactions properly for your business

CAPITAL: is the financial assets your business owns

ACCOUNTS PAYABLE: are expenses you haven’t paid yet, such as something purchased with credit

ACCOUNTS RECEVIEABLE: are services or products you have provided, but haven’t been paid for yet

ACCRUED EXPENSES: are expenses that have been factored into your accounts, but haven’t been paid yet such as salaries or future purchases

CASH FLOW: is cash that comes in and out of your business. Find out more about the importance of positive cashflow here.

COST OF GOODS SOLD: refers to the costs involved in providing your product and service (for example, buying the stock and staff)

DEBITS: increase assets or expenses decrease liabilities

DEPRECIATION: is the loss of value in an asset whilst it’s been in use, for example cars.

EQUITY: is a business’s worth or value of the owners investment in the business.

EXPENSES: are the costs to run your business. Expenses are categorised into fixed, variable, accrued and operating.

GROSS PROFIT: is your income from sales, minus cost of goods sold.

NET INCOME: is the bottom line of the business, once all cashflows have been considered.

INVOICE: is a list of goods or services provided, with a statement of the sum due for these which are given to clients.

LIABILITIES: are debts owned by the business

LIQUIDATION: is dissolving a business and selling off assets to create cash which pays off debt.

PAYROLL: is a list of your employees, and how much their salary or hourly wage is. It is the entire process of recording information through to paying your employees.

RETURN ON INVESTMENT: is how much you make or lose on an investment after your initial input.

REVENUE: is profit earned by your company.

TAX: is payable by most individuals and companies, to the HMRC and is a compulsory contribution based on income or business profit.

TAX DEDUCTIONS: are expenses individuals and business have that can be deducted from their tax bill. Common expenses include mileage, uniform, stationary and energy bills).


This list is NOT exhaustive, but we hope it’s made some of the most common accounting terms a little easier to understand 😊


Need help from an accountant? Soldi Partners are currently taking on new clients. Click here to get in touch.










Autumn Statement 2022 – Lowdown for Small Business

The much-anticipated Autumn Statement – announced by Chancellor Jeremy Hunt yesterday – included a number of measures that will have an impact on small businesses and landlords in the UK. Here’s a roundup of the key takeaways.

Business tax and National Insurance changes
Rate of Class 2 National Insurance to increase
From 6th April 2023, the rate of Class 2 National Insurance for self-employed people will increase to £3.45 per week.

VAT registration threshold to remain at £85,000
The Chancellor confirmed that the threshold for VAT registration will remain at £85,000 worth of VATable sales until 1st April 2026.

Employment Allowance to remain at £5,000
The Employment Allowance – which reduces or cancels out employer’s National Insurance for certain employers – will remain at £5,000.

Corporation Tax rate to remain at 19% for smallest companies
From 1st April 2023:

companies that make a taxable profit of £50,000 or less per year will continue to pay Corporation Tax at the ‘small profits rate’ of 19%
companies with taxable profits between £50,001 and £250,000 a year will pay Corporation Tax at a rate of 25% with a ‘marginal rate relief’ deduction
companies with taxable profits of £250,001 or more a year will pay Corporation Tax at a rate of 25%
National Minimum Wage thresholds increased
From April 2023, all thresholds for the National Minimum Wage will increase. Meanwhile, the National Living Wage will increase by 9.7% to £10.42 an hour for those aged 23 and over.

Increase in bills capped for the smallest businesses affected by reductions in rate relief
For the smallest businesses affected by reductions or changes in eligibility to small business rate relief or rural rate relief, the increase to their bills will be capped at £600 per year from 1st April 2023.

Research and Development (R&D) changes to be implemented
For expenditure on or after 1st April 2023, the Research and Development Expenditure Credit (RDEC) rate will increase from 13% to 20%. The small and medium-sized enterprises (SME) additional deduction will decrease from 130% to 86%, and the SME credit rate will decrease from 14.5% to 10%.

Personal tax and National Insurance changes
Additional rate of tax threshold reduced
The threshold for the additional rate of tax will be reduced from £150,000 to £125,140 from April 2023.

Changes to this and other Income Tax thresholds for non-savings and non-dividend income currently apply to England and Northern Ireland only. The Scottish government has yet to announce changes to Income Tax rates or thresholds. The Welsh government has the power to vary Income Tax rates but has never yet done so.

All other changes, including changes to the thresholds where they apply to savings or dividend income, apply UK-wide.

All other Income Tax and National Insurance thresholds frozen until April 2028
The existing thresholds for all rates of Income Tax and National Insurance will be frozen until April 2028, including the Personal Allowance.

Dividend allowance cut
In April 2023 the dividend 0% tax allowance will be cut from £2,000 to £1,000. In April 2024, it will be reduced further to £500.

Changes to the Annual Exempt Amount for Capital Gains Tax
The Annual Exempt Amount for Capital Gains Tax will be reduced from £12,300 to £6,000 from April 2023. In April 2024, it will be reduced further to £3,000.

Electric cars will no longer be exempt from Vehicle Excise Duty
From April 2025, electric cars will cease to be exempt from Vehicle Excise Duty.

To learn more about the changes announced in the Autumn Statement, you can read the full report on the government’s website.

VAT registered businesses must act now for MTD

From Tuesday 1st November, VAT registered businesses not already signed up to Making Tax Digital, will no longer be able to use their existing VAT online account to file their monthly or quarterly VAT returns. It is now a legal requirement to sign up to Making Tax Digital and use compatible software to file returns. If you don’t you may face penalties.

It’s easy to sign up – using the following steps.

1: Choose a MTD compatible software that is right for you. You can find a list of options on or talk to your accountant.

2: Check the permissions in your software, and allow it to work with MTD. You can then file your returns easily.

3: Keep digital records for your current and future VAT records.

Your accountant may offer training in the compatible software you choose, or offer packages with their practice that includes it.

If you need help or advice about Making Tax Digital for VAT – contact Soldi Partners.


What’s in Kwasi Kwarteng’s Mini Budget?

New Chancellor Kwasi Kwarteng set out a mini-budget on Friday with some headline grabbing tax cuts, which he says are the biggest in a generation.

What do they mean for you?


Income Tax.

Kwarteng has cut the basic rate of income tax from 20% to 19%, effective April 2023. The Government estimates 31 Million people will benefit from £170 more a year.

Basic rate applies to people who earn between £12,571 and £50,270 Per Annum.

He has also abolished the higher rate income tax of 45%, instead keeping one single rate of 40% for people who earn over £50,270.


Corporation Tax.

The Chancellor has decided to stop the planned rise in corporation tax to 25%, opting to keep it at the current 19%.


National Insurance.

The recent rise in NI contributions will be reversed from November 6th. Since April, both workers and employers have paid an extra 1.25% in the pound.


Stamp Duty.

There are changes to when and how much stamp duty you pay now when you buy a property in England and Northern Ireland.

The price in which you pay has now doubled from £125k to £250k. (First time buyers don’t pay until £425k)

From then the rates are:

5% £250k-925k

10% £925k-£1,500,000

12% £1,500,000 +



The big talking point this summer. Kwasi Kwarteng has announced there will be a freeze on energy bills for both residential and businesses, costing the government an estimated £60 Billion for 6 months.


Working and Investments.

Companies can invest tax free annually at £1M indefinitely.

IR35 rules are going to be simplified.

Regulations are changing so pensions funds can increase UK investments.

Share options for employees have been doubled from £30k to £60k.

New and start up companies will be able to raise up to £250k under a scheme giving tax relief to investors.


Good news if you are a banker. The limitations on bankers’ bonuses have been scrapped.


For a more detailed overview of the plans, go to .

If you’d like to discuss how the changes will affect you or your business, as always, give Soldi Partners a call.



5 Ways to Get Support for your SME

Five ways you can get financial support for your business

1: Claim up to £5,000 with employment allowance

Employment allowance is a tax relief which allows eligible businesses to reduce their national insurance contributions bills each year. You can claim this is if you are a business, and your employer Class 1 national insurance liabilities were less than £100,000 in the previous tax year.

That’s a new tax cut that’s worth up to £1,000 for nearly half a million SMEs!

2:Get a discount of up to £5,000 on software, with Help to Grow: Digital

Help to Grow: Digital is a UK wide Government backed scheme that aims to help businesses choose, buy and adopt digital technologies that will help to grow their business.

Eligible businesses can receive a 50% discount on buying new software worth up to £5,000 per SME, alongside free, impartial advice and guidance about what digital technology is best suited to boost their business performance.

3: Get up to half off your business rates 

From April this year, small retail, hospitality and leisure businesses can benefit from 50% off their business rates bills. The business rates multiplier has also been frozen.

4: Invest in your business with Super-deduction and Annual Investment Allowance

To spur business investment, the super-deduction allows companies to cut their tax bill by 25 pence per every £1 they invest in any qualifying machinery and equipment. This can include the purchase of computers, most commercial vehicles and office furniture. This allows businesses to spend up to £1 million on qualifying business equipment , and deduct in-year its full cost before they calculate their taxable profits.

5: Benefit from the cut in fuel duty

The government has cut fuel duty on petrol and diesel by 5 pence per litre for 12 months – effective from 23 March 2022.

This cut, plus the freeze in fuel duty in 2022-2023 , represents a £5 billion saving worth around:

  • £200 for the average van driver
  • £1,500 for the average haulier


Information on behalf of HMRC – for more information visit or Call us for a no obligation Consultation. 

6 Ways to keep your business healthy

2022 is proving to be yet another exhausting year for many – and it’s taking it’s toll on businesses too. Many of us get wrapped up in the day to day running of our businesses, that we neglect key ways to keep ourselves, and our businesses healthy.


Here’s our take on some top tips to implement to do just that.

Personal Wellness.

This industry makes millions and it’s a hot topic again in 2022 thanks to a post covid change in the way we live and value wellness. There is an abundance of paid and free information, ideas and guidance ranging from nutrition to exercise and meditation. With the cost-of-living crisis upon us, and business owners working harder than ever to survive, it’s never been a better time to invest in your personal wellness.


Never underestimate the value of connection in business. Whether it’s a phone call, personalised email or private chat on social media, use every opportunity to connect with your audience to ensure you are a contactable, personable business.

Never stop learning.

A mistake easy to make is complacency in your skillset. The business world is ever evolving and keeping yourself educated and in the know in your industry is an important part of keeping your business and yourself relevant. Invest in yourself and your staff by regularly updating your education and knowledge to keep your business healthy.

Invest in people.

As the ever so wise and successful businessman Steven Bartlett says, when you are a business owner you are essentially a recruitment company. As a business owner you can’t be everything your business needs. Investing in the right people to do the right jobs within your business is one of the most important things you can do to grow.


Laugh more.

This had to be included – there must be a culture of hard work, dedication AND laughter in your business to keep you, your staff, and ultimately your business, healthy.


Don’t ignore the numbers.

We wouldn’t be doing our job if we didn’t shine a light on the importance of bookkeeping and analysing the numbers in your business. Don’t ignore them – healthy businesses are ones with accurate figures and action plans for ensuring those numbers are working for you!

I hope you find these tips helpful. Get in touch if you think of other ways to keep your business healthy!

Until next time,


Five things to know if you are considering employing someone

You’re thinking of employing someone? Great news! This is a positive sign that your business is thriving.

Taking on employees can be a lucrative move – whether you are hiring for someone’s particular expertise to grow your business, expanding your services, or making use of an extra pair of hands so you can dedicate your precious time to scaling the business.

Employing someone isn’t straightforward (nothing ever is in business, right?) and you’ll need to take on new responsibilities, so we have put together some handy tips to bear in mind when taking this exciting step.


1 – Know your facts.

There are numerous responsibilities you will take on when employing someone, so it’s important to have knowledge of employees’ basic statutory rights, employment law, and your PAYE obligations. It might be worth hiring an expert to help you navigate new company policies and contracts to ensure you are compliant as necessary.


2 – Get insured.

You’ll need to get Employment Liability Insurance when taking someone on – this is a legal requirement and is there to protect your staff if they get injured or become ill as a result of working for your business. It’s a relatively small monthly cost to ensure you aren’t liable if something goes wrong.


3- Be careful not to discriminate.

When recruiting you’ll need to ensure you are not discriminating against anyone in the process. Ensure you have a thorough job advert, which clearly states the skills you require for the job.

Don’t ask questions or make decisions based on a candidate’s ‘protected characteristics’  – which include gender and gender reassignment, race, age, disability, religious belief, sexual orientation, pregnancy and marriage, and civil partnership.


4- Can you afford it?

There will be costs involved when hiring someone. You’ll need to check:

  • What the National Minimum wage is
  • How much National Insurance you’ll have to pay
  • How much sick pay your employee is entitled to
  • How much you’ll need to pay towards their pension
  • Maternity / Paternity leave costs (this will include direct payments to your employee along with taking on someone to cover their absence, should you need to)


5- Register as an Employer.

Once you’ve done all of the above checks and you are prepared to take on an employee, you’ll need to register as an employer with HMRC. You’ll find all of the information you need on the GOV.UK website along with the online forms to submit. Click here for more info.


Soldi Partners is able to offer friendly, reliable, and simplified support for your business at all stages.

If you’d like to discuss anything covered in this article, get in touch.

Why should I hire an accountant?

Hiring an accountant to look after your business finances can be a savvy move. DIY finances aren’t for everyone, especially when your accounts start looking rather complicated. Whether you’re just starting out, or if you’re up and running but looking to expand, here are some ideas why you need an accountant helping your business develop.


Saves you time

The majority of people start businesses doing what they love, and what they’ve always dreamt of doing. For most people, this unbridled enthusiasm generally doesn’t extend to spending hours on financial records and paying taxes.

Accountants can help you focus your business efforts on the really important (money-making) stuff, whilst they take care of the other important (tax paying) stuff. It’s a win-win; you don’t get to waste time crunching numbers, and you get to spend time making more money.


They’re up-to-speed

Tax deadlines, limits, and amounts due have an annoying habit of changing on a semi-regular basis. Overlook one critical change, and you could end up massively underestimating your next tax bill.

Using an accountant guarantees that deadlines are met, and that you’ll be paying the correct proportion of tax at the right time (and to the right people). Understanding how the system works can be a bit of a minefield; an accountant will help you tread carefully.




You could save money

Think hiring an accountant is expensive? Think again. A good accountant will be able to highlight any areas where you could be saving money (such as claiming for all of the expenses you’re entitled to), which means that not only could they drastically cut your tax bill, but they could even end up paying for themselves.


Business support and advice

It might be that being a sole trader isn’t very financially efficient any more, and that you’d be better off running as a Limited Company of operating through an Umbrella company.

Accountants aren’t there just to help with finances; their support can improve your whole business setup. If you’re just starting out, they can cast a beady eye over your projections and financial plans. As your business grows, they’ll be able to run you through the various options available and point you in the right direction if you decide to change the structure of your business.


Full account management

Although you’ll still be legally responsible for their accuracy, you can handover full management of your accounts to your accountant. This means they’ll be able to do everything on your behalf, from completing your tax return, managing PAYE to filing your accounts with Companies House. You could even nominate them to manage your communication with HMRC. No more wasted hours listening to dreary hold music? Yes, please.


You might need investment

At some point, most businesses will need investment. Whether it comes in the form of a bank loan, business angels, or investors, you’ll need a solid plan detailing both your forecasts and your accounts to-date.

An accountant will be able to offer guidance and ensure you’ve thought of everything, and provide reassurance to those looking to invest that your figures are accurate and realistic.


It makes life easy

Spreadsheets, invoices, and tax returns aren’t for everyone. If the thought of just opening up your accounts gives you a spreadsheet-induced migraine, hiring an accountant would be a good shout – and some may even give you access to software so you get a hands-on picture of your finances.


Not only will an accountant keep your accounts in order, but you’ll also have the added assurance that you won’t be penalized for late payments. Plus, you’ll get to spend January feeling smug about having a hassle-free tax return; now, who said you can’t buy happiness?