Business Expense & Accounting Glossary
This business expense glossary defines 100+ receipt, expense management, accounting and tax terms, so small business owners, freelancers and finance teams can read reports, file taxes and talk to their accountant with confidence.
No terms match your search. Try a shorter word.
A
Accountable Plan
A company reimbursement arrangement where employees prove business expenses with receipts and return any excess advance. Reimbursements under an accountable plan aren’t taxed as wages.
Accounts Payable (AP)
Money your business owes to suppliers and vendors for goods or services already received but not yet paid for. AP appears as a liability on the balance sheet.
Accounts Receivable (AR)
Money customers owe your business for sales made on credit. Tracking AR closely helps you spot late payers before they hurt cash flow.
Accrual Accounting
An accounting method that records income when it’s earned and expenses when they’re incurred, regardless of when cash changes hands. It gives a truer picture of profitability than cash-basis accounting.
Actual Expense Method
A way to deduct vehicle costs by adding up real expenses such as fuel, repairs, insurance and depreciation, then claiming the business-use share. The alternative is the standard mileage rate.
Amortization
Spreading the cost of an intangible asset, such as software or a patent, or the repayment of a loan over a set period. It lets a business expense large costs gradually instead of all at once.
Approval Workflow
The steps an expense or purchase passes through before it’s approved and paid, such as manager review and finance sign-off. Clear workflows reduce errors and policy violations.
Audit Trail
A chronological record that shows who created, changed or approved a transaction and when. A complete audit trail, backed by receipts, makes tax audits and internal reviews far easier.
Auto-Categorization
Software that assigns an expense category, such as travel, meals or office supplies, automatically based on the merchant and receipt details. It removes most manual data entry from expense tracking.
B
Backup Withholding
Federal income tax a payer must withhold, currently 24%, from certain payments when the recipient’s taxpayer identification number is missing or incorrect, or the IRS orders it.
Balance Sheet
A financial statement showing what a business owns (assets), what it owes (liabilities) and the owner’s equity at a specific date. Assets always equal liabilities plus equity.
Bank Reconciliation
Matching the transactions in your books against your bank statement to confirm both agree. Reconciling monthly catches missing receipts, duplicate charges and fraud early.
Bill Splitting
Dividing a shared bill, such as a group dinner, trip or household cost, between several people, either equally or by what each person used.
Billable Expense
A cost incurred on behalf of a client that you pass on to them, often with the receipt attached to the invoice. Common for freelancers, consultants and contractors.
Bookkeeping
The day-to-day recording of a business’s financial transactions, including sales, purchases, receipts and payments. Good bookkeeping is the foundation for accurate taxes and reports.
Budget
A plan that sets expected income and spending limits for a period, usually a month or year. Comparing actual spending to budget shows where money is going off track.
Business Credit Card
A credit card issued for business spending that keeps company purchases separate from personal ones and simplifies expense tracking and tax records.
Business Expense
A cost that is ordinary and necessary for running your trade or business. Most business expenses are tax-deductible if you keep proper records.
C
Capital Expenditure (CapEx)
Money spent to buy or improve long-term assets such as equipment, vehicles or property. CapEx is usually depreciated over several years rather than expensed immediately.
Cash Flow
The movement of money into and out of a business over a period. Positive cash flow means more money is coming in than going out, which keeps bills paid on time.
Cash-Basis Accounting
An accounting method that records income when cash is received and expenses when they’re paid. It’s simpler than accrual accounting and common among small businesses and freelancers.
Chart of Accounts
The organized list of every account a business uses to record transactions, such as cash, revenue, rent and supplies. It determines how expenses are grouped in reports.
Corporate Card
A company-issued card employees use for approved business spending like travel and client meals. Charges are billed to the company, which removes most reimbursement paperwork.
Cost of Goods Sold (COGS)
The direct cost of producing or buying the products a business sells, including materials and direct labor. Revenue minus COGS equals gross profit.
Currency Conversion
Translating an amount from one currency into another using an exchange rate. For expense reports, foreign receipts are converted into your home currency while the original amount is kept on record.
D
Deductible Expense
A cost the tax code allows you to subtract from taxable income. To claim it, you generally need a receipt or other proof of the amount, date, place and business purpose.
Depreciation
Allocating the cost of a tangible asset, such as a computer or vehicle, over its useful life. Depreciation lets you deduct part of the asset’s cost each year.
Digital Receipt
An electronic proof of purchase sent by email, text or app, or a scanned copy of a paper receipt. Digital receipts don’t fade and are easier to search and store.
Document Retention
How long a business keeps financial records such as receipts, invoices and tax returns. The IRS generally recommends at least three years, and longer in some situations.
Double-Entry Bookkeeping
A bookkeeping system where every transaction is recorded in at least two accounts, as a debit and an equal credit, so the books always balance.
E
E-Receipt
A receipt delivered electronically by a merchant. An order confirmation email isn’t always a full receipt, so check that it shows the amount paid, tax and payment method.
Employer Identification Number (EIN)
A nine-digit number the IRS assigns to identify a business for tax purposes. It’s used on tax returns, payroll filings and many business bank and credit applications.
Expense Category
A label that groups similar costs, such as travel, meals, software or office supplies. Consistent categories make budgets, reports and tax returns accurate.
Expense Management
The process of capturing, approving, reimbursing and analyzing business spending. Modern expense management uses receipt scanning and automation instead of spreadsheets.
Expense Policy
A written set of rules that explains what employees can spend, what needs approval and how to submit receipts for reimbursement.
Expense Report
A document that lists business expenses, with receipts attached, submitted for reimbursement or record-keeping. It usually shows the date, merchant, amount, category and purpose of each expense.
Expense Report Fraud
Submitting false, inflated or duplicate expenses for reimbursement. Requiring itemized receipts and reviewing reports regularly are the main defenses.
F
Fiscal Year
The 12-month period a business uses for accounting and taxes. It can match the calendar year or end in any other month.
Fixed Cost
An expense that stays the same regardless of sales volume, such as rent, insurance or software subscriptions.
Foreign Transaction Fee
A charge some banks and card issuers add, often a percentage of the amount, when you pay in a foreign currency or with a foreign merchant.
Form 1099-NEC
The IRS form a business files to report payments made to independent contractors for services above the reporting threshold during the year.
Form W-9
An IRS form a business collects from contractors and vendors to get their correct name and taxpayer identification number before paying them.
G
General and Administrative (G&A) Expenses
The overhead costs of running a business that aren’t tied directly to producing goods or making sales, such as rent, accounting, insurance and office salaries.
General Ledger
The master record of all a business’s financial transactions, organized by account. Financial statements are built from the general ledger.
Gross Profit
Revenue minus the cost of goods sold. It shows how much a business earns from its products before overhead and other operating expenses.
Gross Receipts
The total amount a business receives from all sources during its tax year, before subtracting any costs or expenses.
H
Health Care Tax Credit
A federal credit that helps eligible small employers offset part of the cost of providing health insurance to employees.
Home Office Deduction
A tax deduction for self-employed people who use part of their home regularly and exclusively for business. It can be calculated with the simplified method or actual expenses.
I
Income and Expense Worksheet
A simple sheet that lists income and expenses by category for a period. It’s a quick way to see profit and prepare for tax filing.
Income Statement
A financial statement, also called a profit and loss statement, that shows revenue, expenses and net income over a period of time.
Independent Contractor
A self-employed person or business that provides services to a client without being an employee. Clients don’t withhold payroll taxes but may need to file Form 1099-NEC.
Invoice
A bill a seller sends to a customer that lists the goods or services provided, amounts due, payment terms and due date.
IRS Audit
A review of a tax return by the IRS to confirm income and deductions are reported correctly. Organized receipts and records are the best preparation.
Itemized Receipt
A receipt that lists each item purchased with its price, plus tax, total, date and merchant. Many expense policies and the IRS prefer itemized receipts over card slips.
J
Journal Entry
A record of a single business transaction in the accounting system, showing the date, accounts affected and debit and credit amounts.
L
Liability
Something a business owes, such as loans, unpaid bills or taxes due. Liabilities appear on the balance sheet.
Line Item
A single entry on a receipt, invoice or expense report, such as one product or one service, with its own amount.
Lost Receipt
A receipt that can’t be found when you need it for a return, reimbursement or tax deduction. Card statements, merchant lookups and a written record can help replace it.
M
Meals and Entertainment Deduction
The tax rules for deducting business meals. Qualifying business meals are generally 50% deductible, while most entertainment costs are not deductible.
Merchant Category Code (MCC)
A four-digit code card networks assign to a merchant based on its type of business. Expense tools often use MCCs to categorize card transactions.
Mileage Log
A record of business trips showing the date, destination, purpose and miles driven. It’s required to support a vehicle or mileage deduction.
Mileage Reimbursement
Payment an employer makes to employees for business miles driven in their personal vehicles, often using the IRS standard mileage rate.
Missing Receipt Affidavit
A signed statement an employee submits in place of a lost receipt, describing the expense, amount, date and business purpose.
N
Net 30
A payment term meaning the full invoice amount is due within 30 days of the invoice date.
Net Income
What’s left after subtracting all expenses, taxes and costs from revenue. Often called the bottom line.
Non-Reimbursable Expense
A cost an employer won’t pay back under its expense policy, such as personal purchases, upgrades or fines.
O
OCR (Optical Character Recognition)
Technology that reads printed or handwritten text from an image. Receipt scanners use OCR and AI to pull out the merchant, date, total and tax automatically.
Operating Expense (OpEx)
An ongoing cost of running a business, such as rent, utilities, payroll and software. Unlike CapEx, operating expenses are usually deducted in the year they’re paid.
Out-of-Pocket Expense
A business cost an employee pays with personal money and later claims for reimbursement.
Overhead
Ongoing business costs that aren’t linked to a specific product or service, such as rent, utilities and administrative salaries.
P
Paperless Receipts
Storing receipts digitally instead of on paper, by scanning them or receiving them electronically. It prevents fading and loss and makes receipts searchable.
Payment Terms
The conditions on an invoice that say when and how payment is due, such as Net 30 or due on receipt.
Per Diem
A fixed daily allowance for lodging, meals and incidental expenses during business travel, used instead of reimbursing each actual cost.
Petty Cash
A small amount of cash kept on hand for minor business purchases. Each payment should be logged with a receipt.
Pre-Approval
Getting permission before making a business purchase or booking travel, usually for costs above a set limit.
Profit and Loss Statement (P&L)
A report showing revenue, costs and expenses over a period, and whether the business made a profit or a loss.
Purchase Order (PO)
A document a buyer sends a supplier to authorize a purchase, listing items, quantities and agreed prices.
Q
Quarterly Estimated Taxes
Tax payments self-employed people and some businesses make four times a year to cover income and self-employment tax that isn’t withheld.
R
Receipt
Written proof of a purchase that shows the merchant, date, items or services, amount paid and payment method.
Receipt Scanner
An app that captures a photo of a receipt and turns it into organized expense data, such as merchant, date, amount and tax.
Recurring Expense
A cost that repeats on a schedule, such as rent, software subscriptions or utilities.
Reimbursement
Paying an employee back for business expenses they covered with their own money, usually after they submit receipts.
Return Policy
A store’s rules for returning or exchanging items, including time limits and whether a receipt is required.
Revenue
The total income a business earns from selling goods or services before any expenses are subtracted.
S
Sales Tax
A tax charged on the sale of goods and some services, collected by the seller and paid to the state or local government.
Schedule C
The IRS form sole proprietors and single-member LLCs use to report business income and expenses on their personal tax return.
Self-Employment Tax
Social Security and Medicare tax paid by self-employed people on their net earnings, covering both the employer and employee share.
Spend Management
Controlling and analyzing all company spending, from purchase approval to payment and reporting.
Split Expense
A purchase divided between business and personal use, or between several people or categories.
Standard Mileage Rate
A per-mile rate the IRS sets each year that can be used to calculate deductible or reimbursable costs of driving for business.
Subscription Expense
A recurring charge for software, tools or services. Business subscriptions are usually deductible when used for work.
T
Tax Credit
An amount subtracted directly from the tax you owe, which makes it more valuable than a deduction of the same size.
Tax Deduction
An expense subtracted from taxable income, which lowers the amount of income that gets taxed.
Tax Year
The annual period covered by a tax return, usually the calendar year for individuals and many small businesses.
Thermal Receipt
A receipt printed on heat-sensitive paper. The ink fades over time, so scanning thermal receipts early keeps a readable copy.
Transaction Number
A unique ID printed on a receipt that identifies a specific purchase. Stores use it to look up a sale for returns or disputes.
Travel and Expense (T&E)
Costs employees incur while traveling or entertaining for business, such as flights, hotels, meals and ground transport.
U
Unreimbursed Employee Expenses
Job-related costs an employee pays and the employer doesn’t pay back. Most W-2 employees currently can’t deduct them on their federal tax return.
V
Value-Added Tax (VAT)
A consumption tax added at each stage of production and sale, used in many countries outside the US. Business travelers can sometimes reclaim VAT on eligible expenses.
Variable Cost
An expense that rises or falls with sales or activity, such as materials, shipping or transaction fees.
Vendor
A person or company that sells goods or services to your business.
Virtual Card
A digital card number issued for online or single-use payments, often with spending limits, to control and track business purchases.
W
W-2
The IRS form employers give employees each year showing wages paid and taxes withheld.
Working Capital
Current assets minus current liabilities. It shows whether a business has enough short-term resources to cover upcoming bills.
Write-Off
An informal term for a deductible business expense, or for removing an uncollectible debt from the books.
Y
Year-End Close
The process of reviewing, reconciling and finalizing a business’s books at the end of its fiscal year before taxes are filed.
Z
Zero-Based Budgeting
A budgeting method where every expense must be justified from zero for each new period, instead of adjusting last year’s budget.
Put these terms to work
Scan receipts, track expenses and export tax-ready reports with Manage Receipt. Free on iPhone and Android.
