Accounting Glossary

Money your business owes to suppliers and vendors for goods or services received but not yet paid for. Tracked as a current liability on the balance sheet. HelloBooks automates AP with purchase orders, GRN matching, and vendor bill management.

Money owed to your business by customers who received goods or services on credit. Tracked as a current asset. HelloBooks manages AR through invoicing, payment tracking, aging reports, and automatic reminders.

An accounting method that records revenue when earned and expenses when incurred, regardless of when cash changes hands. Required by GAAP for most businesses above a certain size. Contrasts with cash-basis accounting.

Smarter accounting for growing businesses

When is it income?

Accrual basis

Record when earned or incurred

• Revenue booked in March
• Receivable until April payment
• Matches income with its expenses

Standard for GAAP / IFRS reporting

vs

Cash basis

Record when money moves

• Revenue booked in April
• No receivables or payables tracked
• Simple, but can distort a month

Common for very small businesses

Example: work done in March, invoiced 31 March, paid 15 April.

A financial statement showing what your business owns (assets), owes (liabilities), and the owner's stake (equity) at a specific point in time. Assets = Liabilities + Equity. HelloBooks generates balance sheets automatically from your transactions.

The process of matching your accounting records to your bank statement to ensure they agree. HelloBooks AI auto-categorizes and matches transactions from connected bank feeds, reducing reconciliation from hours to minutes.

Smarter accounting for growing businesses

Match. Clear. Close.

1. 1

   Bank Statement Line

   What hit the bank?

   Bank feed · 14 May

   Date

   14 May

   Description

   ACME CORP PMT

   Reference

   INV-2045

   Amount

   ₹4,800.00

   Pulled in through a direct bank feed
2. 2

   Ledger Entry

   What did we record?

   Invoice · INV-2045

   Customer

   Acme Corp

   Invoice date

   12 May

   Reference

   ✓INV-2045

   Open amount

   ₹4,800.00

   Open invoice in your books

AI Match Engine

Scores every candidate and explains why

• Amount
• Date (with drift window)
• Reference / memo
• Counterparty
• FX-adjusted value
• Confidence score

• Confident match

  Cleared automatically

  Logged with model version and alternatives considered, so an auditor can replay it.

  Matched

• Low confidence

  Sent to the exception queue

  Candidates shown with scores — one click to confirm, and the AI learns from it.

  Review

Handles the messy cases

• Many-to-oneBatched processor deposits split across invoices.
• Date driftPayments that post days after they were made.
• FX & feesConverted amounts and bank fees posted separately.
• Audit-ready reportOpening, cleared, outstanding and closing balance.

From bank feed to closed period — all in sync.

Illustrative example — figures are for explanation only.

A financial report showing how cash moves in and out of your business through operations, investing, and financing activities. Essential for understanding whether your business generates enough cash to cover expenses.

An organized list of every account used to record financial transactions in your general ledger. Categories include assets, liabilities, equity, revenue, and expenses. HelloBooks creates a standard COA automatically when you set up your entity.

The direct costs of producing goods or services sold by your business — materials, labor, and overhead. Deducted from revenue to calculate gross profit. HelloBooks tracks COGS through inventory and purchase management.

A document issued by a seller to reduce the amount a buyer owes. Used for returns, overpayments, or post-sale discounts. In GST systems, credit notes adjust tax liability and must be reported in GSTR-1.

A document issued when the amount on the original invoice needs to increase — for additional charges, price revisions, or supplementary services. Opposite of a credit note.

The gradual reduction in value of a fixed asset over its useful life. Common methods include straight-line and declining balance. In the US, Section 179 allows immediate expensing of qualifying assets.

Smarter accounting for growing businesses

Cost ÷ life = annual charge.

1. Buy

   Book value ₹1,20,000

   Capitalised to the asset account

2. Y1

   Book value ₹96,000

   ₹24,000 charged

3. Y2

   Book value ₹72,000

   ₹24,000 charged

4. Y3

   Book value ₹48,000

   ₹24,000 charged

5. Y4

   Book value ₹24,000

   ₹24,000 charged

6. Y5

   Book value ₹0

   Fully depreciated

Each run posts Dr Depreciation expense, Cr Accumulated depreciation.

Illustrative example — figures are for explanation only.

An accounting system where every transaction is recorded in at least two accounts — a debit and a credit — ensuring the accounting equation (Assets = Liabilities + Equity) always balances. HelloBooks uses double-entry automatically.

Smarter accounting for growing businesses

Debits = Credits.

Liabilities₹2,00,000+Equity₹3,00,000=Assets₹5,00,000

Buy a ₹50,000 laptop with cash → Dr Computer equipment ₹50,000 · Cr Cash ₹50,000. Assets change shape, the total stays ₹5,00,000.

Illustrative example — figures are for explanation only.

The master record of all financial transactions for a business, organized by account. Every entry in the GL follows double-entry bookkeeping. HelloBooks maintains your GL automatically from invoices, bills, payments, and journal entries.

Revenue minus cost of goods sold (COGS). Represents the profit before operating expenses, taxes, and interest. Gross profit margin (gross profit / revenue) indicates pricing efficiency.

A record of a financial transaction in the general ledger, showing debits and credits. Manual journal entries handle adjustments, corrections, and non-standard transactions that don't originate from invoices or bills.

The bottom line — revenue minus all expenses including COGS, operating costs, interest, and taxes. Also called net income. The P&L statement's final figure.

Also called an income statement. Shows revenue, expenses, and profit or loss over a period. Essential for understanding business performance. HelloBooks generates P&L reports automatically with AI-powered insights.

A report listing all general ledger accounts and their balances to verify that total debits equal total credits. Used to check for errors before preparing financial statements.

The day-to-day recording of a business's financial transactions — sales, purchases, receipts, and payments — into organized accounts. Bookkeeping is the foundation that accounting builds on: accurate books feed the general ledger, financial statements, and tax filings. HelloBooks automates bookkeeping by importing bank feeds, categorizing transactions with AI, and posting double-entry records in real time.

The net movement of money into and out of a business over a period. Positive cash flow means more money is coming in than going out; negative cash flow signals the opposite. Distinct from profit — a profitable business can still run out of cash. HelloBooks tracks cash flow live and projects runway from your invoices, bills, and bank balances. See also the Cash Flow Statement.

A chronological, tamper-evident record of every change made to a financial transaction — who created it, who edited it, what changed, and when. Essential for audits, fraud prevention, and regulatory compliance (SOX, GST, GAAP). HelloBooks maintains an immutable audit trail on every invoice, bill, journal entry, and payment.

Journal entries made at the end of an accounting period to transfer balances from temporary accounts (revenue, expenses, dividends) into permanent equity accounts, resetting the temporary accounts to zero for the next period. Part of the month-end and year-end close. HelloBooks generates closing entries automatically.

The process of finalizing a business's books at the end of each month — reconciling bank and credit-card accounts, posting accruals and adjustments, reviewing the trial balance, and locking the period. A faster close means timelier financial reporting. HelloBooks shortens the close with automated reconciliation and a guided close checklist.

Smarter accounting for growing businesses

Close with confidence.

1. Step 1

   Reconcile

   Bank, card and wallet accounts

2. Step 2

   AR & AP review

   Open invoices and bills checked

3. Step 3

   Accruals

   Expenses and revenue in the right period

4. Step 4

   Depreciation

   Fixed-asset run posted

5. Step 5

   Trial balance

   Debits equal credits

6. Step 6

   Lock & report

   P&L, Balance Sheet, Cash Flow

The ongoing operating costs of running a business that are not directly tied to producing a specific product or service — rent, utilities, insurance, administrative salaries, and software. Overhead is allocated across products to understand true profitability. HelloBooks tracks overhead by category for accurate cost and margin reporting.

The gradual write-off of the cost of an intangible asset (patents, goodwill, software licences) over its useful life — the intangible-asset equivalent of depreciation. Amortization also describes spreading loan repayments into equal periodic instalments of principal and interest. HelloBooks posts amortization schedules automatically.

Accounts receivable turnover is a ratio that measures how many times a business collects its average accounts receivable balance during a period. It is calculated by dividing net credit sales by average accounts receivable.

Segregation of duties is an internal control that splits key steps of a financial process among different people so no single person can both commit and conceal an error or fraud. The classic split separates authorizing transactions, recording them, and having custody of assets.

A bank rule is an automated instruction in accounting software that categorizes imported bank or card transactions based on conditions such as payee, description, or amount. When a transaction matches the rule, it is assigned the preset account, contact, or tax treatment automatically.

Continuous close is an approach to accounting where reconciliations, categorization, and adjustments are performed throughout the period rather than all at once at month end. The goal is to keep the books close to final at any point so the formal close takes much less time.

Costs a business has incurred but not yet been billed for or paid, recorded as a liability so the expense lands in the period it belongs to. Typical examples are wages earned but unpaid at month end, interest, and utilities consumed before the invoice arrives. Reversed when the actual bill is booked.

Revenue earned by delivering goods or services that has not yet been invoiced to the customer, recorded as an asset. Common on milestone contracts and retainers where work is performed in one period and billed in the next. The opposite situation to deferred revenue.

A contra-asset account that reduces accounts receivable by the portion management expects never to collect. Estimated from historical loss rates or an aging analysis, it keeps receivables stated at realisable value instead of face value. Also called the provision for bad debts.

A resource the business controls that is expected to produce future economic benefit. Split into current assets, convertible to cash within a year, such as cash, receivables and inventory, and non-current assets like equipment, property and intangibles. One side of the accounting equation: Assets = Liabilities + Equity.

An obligation to pay money or deliver value to someone else as a result of a past transaction. Current liabilities fall due within a year, for example payables, accrued expenses and short-term debt; non-current liabilities, such as term loans, fall due later.

The owners residual claim on the business after every liability is settled: Equity = Assets minus Liabilities. Made up of capital contributed by owners plus accumulated retained earnings, less any drawings or distributions. Also called net worth or shareholders funds.

The cumulative profit a business has earned since inception, less every dividend or distribution paid out. It sits in equity on the balance sheet and is the link between the profit and loss statement and the balance sheet each period.

Money or assets a sole proprietor or partner takes out of the business for personal use. A draw reduces equity rather than appearing as a business expense, so it never affects reported profit, and it is not payroll. Owners of corporations take salary or dividends instead.

Spending to acquire or improve a long-lived asset, capitalised on the balance sheet and then depreciated over its useful life rather than expensed at once. Buying a delivery van is capital expenditure; fuelling it is an operating expense.

The day-to-day cost of running the business, charged against profit in the period it is incurred: rent, salaries, software subscriptions, utilities and professional fees. Contrasted with capital expenditure, which is capitalised and depreciated.

Amounts paid in advance for goods or services the business has not yet consumed, carried as a current asset and released to expense as the benefit is used. Annual insurance premiums, software licences and advance rent are the usual cases.

Cash collected from a customer before the goods or services have been delivered, held as a liability until the obligation is met. Standard for subscriptions, annual plans and deposits. Recognised as revenue progressively as delivery occurs.

Another name for deferred revenue: a customer payment received in advance of performance, carried as a liability because the business still owes the goods or services. It becomes revenue only once the obligation is satisfied.

A receivable the business has concluded it will not collect. Recognised either directly as an expense when a specific invoice is abandoned, or through an allowance for doubtful accounts that estimates losses in advance.

The accounting entry that removes an asset carrying no remaining value from the books, such as an uncollectible invoice or obsolete stock. Distinct from a write-down, which reduces an asset to a lower value without removing it.

An account deliberately carrying the opposite balance to the account it is paired with, so both the gross figure and the reduction stay visible. Accumulated depreciation offsets fixed assets; allowance for doubtful accounts offsets receivables; sales returns offset revenue.

A detailed ledger holding the individual transactions behind a single general-ledger account, such as one line per customer in accounts receivable. The sub-ledger total must agree with its general-ledger control account.

A general-ledger account whose balance summarises an entire sub-ledger, for example the receivables control account standing for every customer balance. Comparing the two is a routine check that no detail entry has been lost or double-counted.

A temporary holding account for transactions that cannot yet be classified, perhaps an unidentified bank receipt or an entry pending documentation. It should be investigated and cleared to zero before the books are closed.

A transit account used to hold amounts briefly while a transaction moves between systems or stages, such as undeposited funds or a payroll clearing account. By design it nets to zero once both sides of the transaction are posted.

A small cash float kept on site for minor expenses too trivial for a purchase order or card payment. Controlled with receipts for every disbursement and periodic replenishment back to the agreed float.

A petty-cash control method that fixes the float at a set amount and tops it back up by exactly the receipts presented. Because cash on hand plus vouchers must always equal the float, any shortfall is visible immediately.

Comparing two independent records of the same transactions and resolving every difference, most commonly the accounting ledger against a bank statement. Reconciliation is what makes a balance trustworthy rather than merely recorded.

Transfers of goods, services, loans or cost allocations between entities under common ownership. Each entity records its own side, and the matching amounts must be eliminated on consolidation so group results are not inflated.

Combining the financial statements of a parent and its subsidiaries into one set of accounts presenting the group as a single economic entity. Intercompany balances, sales and unrealised profits are eliminated in the process.

A statement reconciling opening retained earnings to the closing figure by adding the period profit and deducting dividends or distributions. It explains the movement linking the profit and loss statement to the balance sheet.

A cash flow statement that starts from net profit and adjusts for non-cash items such as depreciation and for movements in working capital to arrive at operating cash flow. The indirect method is the common presentation because it reuses figures already in the ledger.

The standard set of reports describing a business: the balance sheet, the profit and loss statement, the cash flow statement, the statement of changes in equity, and the accompanying notes. Together they show position, performance and cash generation.

The income a business earns from its normal activities — mainly sales of goods and services — before any expenses are deducted. Also called the top line, because it sits at the top of the income statement.

A cost incurred by a business to earn revenue, such as rent, salaries, utilities and supplies. Expenses are matched to the period in which they help generate revenue and reduce profit.

The split of assets by how soon they are expected to be converted to cash or used. Current assets (cash, receivables, inventory) are expected within a year; non-current assets (property, equipment, long-term investments) are held longer.

Obligations due beyond one year, such as long-term loans, bonds, lease liabilities and deferred tax. They finance longer-term assets and are shown separately from current liabilities on the balance sheet.

An account that reduces the value of a related asset, carrying a credit balance against the asset's debit balance. Accumulated depreciation and the allowance for doubtful accounts are common examples.

The total depreciation charged against a fixed asset since it was acquired. It is a contra-asset account; the asset's cost less accumulated depreciation gives its net book value.

The value of an asset or a business as recorded in the accounts — for an asset, cost less accumulated depreciation; for a company, total assets less total liabilities. It can differ significantly from market value.

The estimated amount an asset is expected to be worth at the end of its useful life. Depreciation is calculated on the cost minus salvage value, so it is spread only over the portion of cost the business expects to consume.

A depreciation method that charges an equal amount each period over an asset's useful life. It is the simplest method and suits assets that lose value evenly over time.

An accelerated depreciation method that applies a fixed percentage to the asset's reducing book value each period, charging more in the early years. It suits assets that lose value faster when newer.

A depreciation method that charges cost based on actual usage — units produced or hours run — rather than time. It matches the expense to how intensively the asset is used in each period.

Recording an expenditure as an asset and spreading its cost over future periods through depreciation or amortization, instead of expensing it immediately. It applies to spending that provides benefit beyond the current period.

The end-of-period process of finalising the accounts — posting adjustments, reconciling balances, transferring revenue and expense balances to retained earnings, and locking the period so reports are stable.

The balance in an account at the start of a period, carried forward from the close of the prior period. Correct opening balances are essential when migrating to new accounting software.

The step of transferring amounts from journal entries into the individual accounts of the general ledger. In modern software, posting happens automatically when a transaction is recorded.

A journal entry made at the start of a period to cancel a specific adjusting entry from the prior period, simplifying the recording of the actual transaction when it occurs. It prevents double counting of accruals.

A journal entry that affects more than two accounts at once, with multiple debits and/or credits, while still keeping total debits equal to total credits. Payroll and invoices with tax are common examples.

The journal is the chronological record where transactions are first entered; the ledger organises those entries by account. The journal answers "what happened and when," the ledger answers "what is the balance of this account."

Revenue that has been earned but not yet invoiced or received, recorded as an asset so it appears in the period it was earned. It is the mirror image of accrued expenses.

A liability of uncertain timing or amount recognised when a business has a present obligation that will probably require settlement, such as warranty costs or expected bad debts. It is estimated and reviewed each period.

An appropriation of retained earnings set aside within equity for a purpose such as future expansion or to strengthen the balance sheet. Unlike a provision, a reserve is part of equity, not a liability.

Capital expenditure buys or improves long-lived assets and is capitalised and depreciated; revenue expenditure covers day-to-day running costs and is expensed in the period. The split affects both profit and the balance sheet.

A non-physical asset with value, such as patents, trademarks, software and goodwill. Those with a finite life are amortised over that life, while indefinite-life intangibles are tested for impairment.

A reduction in an asset's carrying amount when its recoverable value falls below what the books show. The write-down is recognised as a loss, keeping assets from being overstated.

A balance arising from timing differences between how items are treated in the accounts and in the tax computation. Deferred tax liabilities represent tax expected to be paid later; deferred tax assets, tax expected to be recovered.

The practice of temporarily holding a transaction in a suspense account when its correct classification is unclear, then clearing it to the right account once resolved. A suspense balance at period end signals unfinished work.

Reducing the recorded value of an asset to reflect a fall in its worth — for example inventory to net realisable value — without removing it entirely. A full removal is a write-off.

The equity account recording the owners' investment in a business and their share of accumulated profits. In partnerships and proprietorships it tracks contributions, drawings and profit shares per owner.

Money or goods an owner takes out of a sole proprietorship or partnership for personal use. Drawings reduce the owner's capital and are not a business expense.

Mistakes that a trial balance may or may not reveal. A trial balance catches errors that unbalance debits and credits, but not errors of omission, commission, principle or compensating errors, which leave it balanced yet wrong.

Bookkeeping is the systematic recording and organising of financial transactions; accounting builds on that record to classify, summarise, interpret and report. Bookkeeping is the data layer, accounting the analysis layer.

A simple method that records each transaction once, much like a cash book, without the matching debit and credit of double entry. It is easy but cannot produce a full balance sheet or catch many errors.

A short explanation attached to a journal entry describing what the transaction was for. Good narrations make the books auditable and help anyone reviewing the entry understand it later.

A document that supports and authorises an accounting entry, such as a payment or receipt voucher. Vouchers provide the evidence trail behind the figures recorded in the books.

A book of original entry recording all cash and bank receipts and payments. It doubles as both a journal and a ledger account for cash, and its balance should reconcile to the bank statement.

A book of prime entry where transactions of a particular type — sales, purchases, returns — are first listed in date order before being posted to the ledger. It keeps the ledger uncluttered.

A reduction off the list price given to a buyer, usually for volume or trade status, deducted before the invoice is raised. It is not recorded separately in the books because the invoice is already net of it.

A reduction offered to a customer for paying within a set time. Unlike a trade discount, it is recorded in the books because it affects the amount actually received against the invoiced total.

Expenses that relate to the current period but remain unpaid at its end, recorded as a liability so the cost is matched to the right period. They are a form of accrued expense.

A possible obligation that depends on an uncertain future event, such as a pending lawsuit or guarantee. It is disclosed in the notes rather than recorded, unless payment becomes probable and measurable.

An estimate of receivables unlikely to be collected, charged as an expense and set against the receivables balance. It applies the prudence principle so assets and profit are not overstated.

A reserve created from capital profits — such as gains on sale of fixed assets or premium on shares — rather than from trading profit. It is generally not available for distribution as dividends.

A reserve recording the increase in the carrying value of an asset when it is revalued upward. It is part of equity and is not a realised profit until the asset is sold.

Both spread an asset's cost over its useful life, but depreciation applies to tangible assets like equipment, while amortization applies to intangible assets like patents and to loan principal repayment.

Carriage inward is the freight cost of bringing purchases into the business, added to the cost of goods; carriage outward is the cost of delivering goods to customers, treated as a selling expense.

A statement reconciling the balance in a business's cash book with the balance on its bank statement, explaining differences such as unpresented cheques, deposits in transit and bank charges.

The value of unsold inventory at the end of an accounting period. It reduces the cost of goods sold for the period and is carried forward as the opening stock of the next.

The value of inventory a business holds at the start of an accounting period, carried over from the prior period's closing stock. It is added into the cost of goods sold calculation.

Goods returned by a customer after a sale, reducing recorded revenue and, where tax applies, adjusting the tax charged — often through a credit note. Also called returns inward.

Goods a business returns to a supplier after purchase, reducing recorded purchases and the amount owed — often via a debit note. Also called returns outward.

Spending on fixed assets still under construction or not yet ready for use. It sits on the balance sheet as CWIP and is not depreciated until the asset is completed and put into service.

A large revenue expense whose benefit extends over several periods, written off gradually rather than all at once. The concept is used less under modern standards, which favour expensing or capitalising.

A trial balance is an internal list of all ledger balances used to check that debits equal credits; a balance sheet is a formal statement of assets, liabilities and equity at a point in time, prepared from those balances.

Journal entries posted at the end of a period so that revenue and expenses fall in the right period under accrual accounting. The usual categories are accruals, prepayments, depreciation, and provisions such as doubtful debts.

The rules determining when a sale may be recorded as revenue, which is when control of the goods or services passes to the customer rather than when cash arrives. Misapplying it is one of the most common causes of restated accounts.

The US GAAP revenue standard, Revenue from Contracts with Customers. It applies a five-step model: identify the contract, identify the performance obligations, determine the transaction price, allocate it to the obligations, then recognise revenue as each obligation is satisfied.

The IFRS revenue standard, Revenue from Contracts with Customers, substantially converged with ASC 606 and built on the same five-step model. It replaced earlier, industry-specific revenue guidance with one principles-based approach.

Generally Accepted Accounting Principles, the accounting framework used for US financial reporting and maintained by the Financial Accounting Standards Board. More rules-based than IFRS, and required for SEC registrants.

International Financial Reporting Standards, issued by the International Accounting Standards Board and used or permitted in well over a hundred jurisdictions. More principles-based than US GAAP, with differences in areas such as inventory costing and development costs.

Recording revenue when cash is received and expenses when cash is paid. Simple and a close proxy for cash position, but it ignores receivables, payables and inventory, so it can misstate profitability in any period. Eligibility is restricted by size and entity type in most tax systems.

A hybrid that keeps cash-basis treatment for most items while applying accrual treatment to selected ones, typically capitalising and depreciating fixed assets and recording long-term debt. Used for internal reporting; not a recognised framework for audited statements.

The principle that transactions are recorded when they occur economically rather than when cash moves, and the entries that implement it. Accrual accounting is required under both GAAP and IFRS for general-purpose financial statements.

The rule that expenses are recognised in the same period as the revenue they helped generate. It is why cost of goods sold moves with sales and why prepayments are released over the periods that benefit.

The threshold above which an omission or error would change a reasonable users decision about the business. It governs how much precision and disclosure a given item justifies, and is judged in context rather than by a fixed percentage.

The assumption that the business will continue operating for the foreseeable future, which is what permits assets to be carried at cost rather than liquidation value. Where significant doubt exists, management and auditors must disclose it.

The twelve-month period a business uses for reporting and tax, which need not match the calendar year. India uses 1 April to 31 March; the UK tax year for individuals ends 5 April; many US businesses use the calendar year, and retailers often pick a trading low point.

The practice of capturing, assigning and analysing the cost of producing goods or delivering services, so that pricing, margin and efficiency decisions rest on real figures. Internal by nature, it is not bound by external reporting standards.

The foundational identity of double-entry bookkeeping: Assets = Liabilities + Equity. Every transaction keeps the equation in balance, which is why total debits always equal total credits.

The two sides of every double-entry transaction. Debits increase assets and expenses and decrease liabilities, equity and income; credits do the reverse. Each transaction records equal debits and credits so the books stay balanced.

A visual representation of a ledger account shaped like the letter T, with debits recorded on the left and credits on the right. It is a teaching and analysis tool for seeing how entries affect a single account.

The repeating sequence of steps that turns transactions into financial statements: recording journal entries, posting to the ledger, preparing a trial balance, making adjustments, and producing and closing the statements each period.

The span of time over which financial performance is measured and reported, such as a month, quarter or year. Consistent periods make results comparable across time.

The two main accounting methods. Accrual basis records revenue when earned and expenses when incurred; cash basis records them only when money moves. Accrual gives a truer picture of performance, while cash basis is simpler.

The accounting convention of recognising expenses and liabilities as soon as they are probable, but recognising revenues and gains only when reasonably certain. It avoids overstating the financial position.

The convention that a business applies the same accounting methods from period to period, so results are comparable over time. Changes are allowed but must be disclosed and justified.

The convention that assets are recorded at their original purchase cost rather than current market value. It gives a verifiable, objective basis for the accounts, though it can understate the current worth of long-held assets.

The rule that revenue is recorded when it is earned and realisable — when control of goods or services passes to the customer — regardless of when payment is received. Modern standards set a structured model for applying it.

The convention that financial statements, including the notes, must reveal all information that could influence a reader's understanding or decisions. It underpins the detailed disclosures accompanying the primary statements.

The convention that a business's transactions are kept separate from those of its owners and other businesses. It is why personal and business finances must not be mixed in the accounts.

The convention that only transactions measurable in a stable monetary unit are recorded, and that the currency's value is treated as reasonably stable over time. Non-monetary factors, however important, are not booked.

The convention that a business's life can be divided into regular reporting periods so performance can be measured and compared, even though many activities span period boundaries.

The authoritative rules governing how transactions are recognised, measured and disclosed in financial statements, such as IFRS, US GAAP and national standards. They make financial reports consistent and comparable.

Traditional rules for recording entries by account type: debit the receiver and credit the giver (personal), debit what comes in and credit what goes out (real), and debit expenses and losses and credit incomes and gains (nominal).

An account for incomes, expenses, gains and losses, closed to the profit and loss at period end. It contrasts with real accounts (assets) and personal accounts (people and entities).

An account for assets and property whose balance carries forward from one period to the next rather than being closed to profit and loss. Examples include cash, inventory and equipment.

An account relating to persons or entities a business deals with, such as customers, suppliers and lenders. Its balance represents amounts owed to or by those parties.

A document sent to a customer requesting payment for goods or services. Includes seller and buyer details, items, amounts, taxes, and payment terms. HelloBooks supports AI-powered smart invoicing with multi-channel delivery.

A preliminary invoice sent before delivery as an estimate or quotation. Not a demand for payment — used for customs, advance payments, and price confirmation. Can be converted to a tax invoice in HelloBooks.

A formal document sent to a vendor authorizing a purchase. Specifies items, quantities, agreed prices, and delivery terms. HelloBooks supports 3-way matching: PO to GRN to vendor invoice.

An invoice automatically generated and sent on a schedule — weekly, monthly, quarterly. Ideal for subscription services, retainers, and maintenance contracts. HelloBooks automates creation, delivery, and payment tracking.

A confirmation document sent to a customer after they accept a quote, before delivery and invoicing. HelloBooks converts quotes to sales orders to invoices in a seamless workflow.

A report that groups unpaid invoices (accounts receivable) or bills (accounts payable) by how long they have been outstanding — typically 0–30, 31–60, 61–90, and 90+ day buckets. It highlights overdue balances and collection risk. HelloBooks generates AR and AP aging reports in real time with automated payment reminders.

Bad debt expense is the cost a business recognizes for credit sales it does not expect to collect from customers. Under the allowance method it is estimated each period and matched to the related sales, while the direct write-off method records it only when a specific account is deemed uncollectible.

A customer statement of account is a summary sent to a customer listing all invoices, payments, and credits over a period, along with the balance owed. Unlike an invoice, it does not bill for new goods or services but shows the overall account status.

The structured sequence of reminders sent to a customer with an overdue balance, escalating in tone and channel over time. Automating dunning is one of the most reliable ways to reduce days sales outstanding.

The process of pursuing payment on overdue invoices, from reminders and statements through payment plans to legal action or external agencies. Effective collections depend on accurate aging data and a consistent escalation policy.

A document issued to reduce the amount a customer owes, used for returns, overcharges, agreed discounts or service failures. It can offset a future invoice or support a refund, and in VAT and GST systems it also adjusts the tax reported.

A note sent by a payer listing exactly which invoices a payment covers. Without it, part-payments and bulk transfers have to be allocated by guesswork, which is a common source of reconciliation delay.

A periodic summary sent to a customer showing opening balance, invoices raised, payments and credits applied, and the closing balance owed. Unlike an invoice it is not a demand for a specific sum but a reconciliation tool.

An invoice that shows the tax charged on a supply separately from the price, enabling the buyer to claim input tax credit where allowed. Under GST and VAT systems it must carry prescribed details such as tax identification numbers and rates.

A document used in international trade stating the goods, their value and the terms of sale between exporter and importer. Customs authorities rely on it to assess duties and clear shipments.

An invoice billed from recorded hours worked, common for consultants, agencies and professional services. It ties billable time and rates directly to the amount charged.

Invoicing a customer in stages as defined project milestones are completed, rather than all at once. It aligns cash flow with delivery on long projects and is common in construction and software.

Billing a long-running contract incrementally based on the percentage of work completed. It keeps cash flowing during a project and is closely tied to percentage-of-completion revenue recognition.

An invoice for an advance payment a client makes to secure future services, drawn down as work is performed. The retainer is a liability until the services are delivered and earned.

Selling unpaid invoices to a third party at a discount for immediate cash. The factor collects from the customers; the business trades a slice of the invoice value for faster access to funds.

Borrowing against the value of outstanding invoices while the business keeps control of its own collections, unlike factoring. It releases cash tied up in receivables.

The conditions on which a seller expects payment, such as net 30, net 60 or due on receipt, sometimes with early-payment discounts. Clear terms set expectations and support collections.

A payment term meaning the full invoice amount is due within 30 days of the invoice date. Net 15 and net 60 work the same way with different windows.

A payment term offering a 2% discount if the invoice is paid within 10 days, with the full amount otherwise due in 30 days. It rewards customers for paying early and speeds up cash collection.

A reduction a seller offers to encourage customers to pay before the due date. It improves cash flow for the seller at the cost of a small margin, and lowers the cost of goods for prompt buyers.

A charge added to an invoice when it is paid after the due date, intended to discourage slow payment and compensate for the delay. Its enforceability and rate may be governed by contract or law.

A document giving a customer a fixed or estimated price for goods or services before they commit. Accepting a quote often converts it into a sales order or invoice.

An approximate statement of the likely cost of a job before the final price is settled, common in trades and services. Unlike a firm quote, it can change as the scope of work becomes clearer.

A unique identifier assigned to each invoice in a sequence, used to reference, track and reconcile it. Many tax systems require invoice numbering to be sequential and gap-free.

A document that increases the amount a buyer owes a seller after the original invoice, for additional charges, undercharges or price corrections. It is the opposite of a credit memo.

An arrangement where the customer, rather than the supplier, prepares the invoice on the supplier's behalf under an agreement. It is used where the buyer has better data on quantities or prices, such as commissions or royalties.

A report grouping unpaid customer invoices by how long they have been outstanding — current, 1–30 days, 31–60 days and so on. It shows where collection effort is needed and flags likely bad debts.

A report grouping unpaid supplier bills by how long they have been outstanding, helping a business manage payment timing, avoid late fees and preserve supplier relationships while protecting cash.

The control of comparing a supplier invoice against the related purchase order and goods receipt before approving payment, so a business pays only for what it ordered and received at the agreed price.

Matching payments received or made against the corresponding invoices and bank transactions, so the records of what is owed and owing stay accurate and discrepancies are caught quickly.

An invoice requesting an upfront partial payment before goods or services are delivered. The deposit is later offset against the final invoice for the balance.

A single invoice combining multiple orders, deliveries or periods for one customer, reducing paperwork and simplifying reconciliation for both parties.

The recurring interval over which a business invoices a customer — for example monthly or quarterly. A consistent billing cycle makes revenue and cash flow more predictable.

The maximum amount a business allows a customer to owe at any time on credit terms. Setting and enforcing credit limits controls the risk of bad debts from over-extended customers.

The process of managing which customers get credit, on what terms, and how overdue amounts are chased. Strong credit control protects cash flow and reduces bad debts.

A payment received but not yet matched to a specific invoice, often because of missing references. Clearing unapplied payments promptly keeps customer balances accurate.

A payment that settles only part of an invoice, leaving a balance outstanding. It is recorded against the invoice so the remaining amount due is tracked correctly.

Money received from a customer before goods or services are delivered. It is recorded as a liability until earned, and in tax systems like GST may carry tax obligations at the time of receipt.

A document confirming that goods ordered via a purchase order have been physically received and inspected. Part of 3-way matching (PO → GRN → Invoice) to prevent overpayment. HelloBooks has full GRN with validation rules.

A verification process that matches the purchase order, goods receipt note, and vendor invoice to ensure you only pay for what was ordered and received at the agreed price. Prevents fraud and errors.

Smarter accounting for growing businesses

Spend smart. Pay right. Grow faster.

1. 1

   Purchase Order (PO)

   What did we order?

   Purchase order · PO-1001

   Supplier

   ABC Traders

   Item

   Office chair

   Qty

   100

   Rate

   ₹500

   Total

   ₹50,000

   Approved purchase from your business
2. 2

   Goods Receipt (GRN)

   What did we receive?

   Goods receipt · GRN-1001

   Supplier

   ABC Traders

   Item

   Office chair

   Qty received

   100

   Quality check

   ✓Passed

   Received on

   12 Apr

   Confirms what actually arrived
3. 3

   Supplier Invoice

   What are we billed?

   Supplier invoice · INV-1001

   Supplier

   ABC Traders

   Item

   Office chair

   Qty billed

   100

   Rate

   ₹500

   Total

   ₹50,000

   What the supplier is asking you to pay

HelloBooks Match Engine

Compares key details automatically

• Supplier
• Item / description
• Quantity
• Rate / price
• Total amount
• Tolerances (if any)

• All 3 match?

  Invoice approved for payment

  Moves to the payment queue automatically — or through your approval workflow.

  Approved

• Mismatch?

  Held for review

  Flagged for your team with the reason — quantity, price or document mismatch.

  On hold

Why 3-way matching matters

• Prevents overbillingNever pay for more than you ordered or received.
• Reduces fraud & errorsCatches duplicate or incorrect invoices.
• Stronger audit trailFull visibility from PO to payment.
• Faster AP processingClean matches move forward on their own.

From purchase to payment — all in sync.

Illustrative example — figures are for explanation only.

An inventory valuation method where the oldest stock is sold first. During inflation, FIFO results in lower COGS and higher reported profits compared to LIFO.

Fixed costs stay the same in total regardless of how much a business produces or sells within a relevant range, such as rent, insurance and salaried wages. Variable costs change in total in direct proportion to activity, such as raw materials, packaging and sales commissions. Some costs, called mixed or semi-variable costs, contain both elements.

A perpetual inventory system is a method of tracking inventory that updates quantities and costs continuously, recording each purchase and sale as it happens. Cost of goods sold is recorded at the time of each sale, so inventory balances are always current in the books.

A periodic inventory system is a method of tracking inventory where purchases are recorded in a purchases account and inventory is updated only at the end of a period based on a physical count. Cost of goods sold is calculated as a single figure at period end.

Determining the monetary value of stock on hand, which sets both the balance-sheet asset and cost of goods sold. The method chosen, FIFO, LIFO or weighted average, changes reported profit when input prices move, so it must be applied consistently.

An inventory costing method that charges the most recently purchased stock to cost of sales first. In a rising-price environment it reports higher cost of sales and lower profit than FIFO. Permitted under US GAAP but prohibited under IFRS.

An inventory method valuing every unit at the average cost of all units available, recalculated as new stock arrives. It smooths the effect of price volatility and is permitted under both GAAP and IFRS.

An inventory system that updates quantities and cost of sales continuously as each sale and receipt is recorded, so stock figures are available at any moment. Physical counts still matter, but they verify the records rather than create them.

An inventory system that establishes stock levels and cost of sales only by counting at the end of each period. Cheaper to run than a perpetual system, but shrinkage and errors stay invisible between counts.

The full cost of getting a purchased item into saleable position: supplier price plus freight, insurance, customs duty, handling and any non-recoverable taxes. Pricing on supplier invoice alone systematically understates true cost on imported goods.

The order size that minimises the combined cost of ordering and holding inventory. Ordering in EOQ-sized batches balances the cost of frequent small orders against the cost of carrying large stocks.

The inventory level at which a new order should be placed to avoid running out before the replenishment arrives. It is based on demand during the supplier lead time plus any safety stock.

Extra inventory held as a buffer against uncertainty in demand or supplier lead time, reducing the risk of stockouts. Holding it costs money, so the level is a trade-off against service.

The time between placing an order with a supplier and receiving the goods. Longer or more variable lead times require higher safety stock to maintain the same service level.

The total cost of holding inventory over time, including storage, insurance, obsolescence, spoilage and the capital tied up. It is a key input to order-quantity and stocking decisions.

Running out of an item so that demand cannot be met from stock. Stockouts cost lost sales and can damage customer trust, which is why businesses hold safety stock and track reorder points.

Inventory that has not sold and is unlikely to sell, tying up cash and storage space. Identifying dead stock lets a business clear it through discounts or write it off.

A method of classifying inventory into categories A, B and C by value and importance, so management attention and controls focus on the small share of items that drive most of the value.

An approach that keeps inventory to a minimum by receiving goods only as they are needed for production or sale. It cuts carrying cost but relies on reliable suppliers and demand.

The estimated selling price of inventory less the costs to complete and sell it. Inventory is generally carried at the lower of cost and NRV, so a fall in NRV triggers a write-down.

An inventory valuation rule requiring stock to be reported at the lower of its historical cost or its current market value, so that likely losses are recognised promptly.

A method that assigns predetermined standard costs to products and then analyses the variances between standard and actual costs. It is widely used in manufacturing for control and pricing.

A structured list of the raw materials, components and quantities needed to make a finished product. It drives manufacturing cost, inventory planning and procurement.

A method of checking inventory accuracy by counting a subset of items on a rolling schedule rather than halting operations for a full stocktake. It keeps records accurate with less disruption.

Inventory that has left the supplier but not yet reached the buyer. Which party records it depends on the shipping terms, which decide when ownership and risk pass.

Stock held by one party but still owned by another until it is sold. The holder records a sale only when the goods are sold on; the owner keeps the inventory on their books until then.

The process of selecting, onboarding, monitoring and paying suppliers to get reliable quality, pricing and delivery. Good vendor management reduces cost and supply risk.

The end-to-end process from requesting and ordering goods to receiving them and paying the supplier. Integrating these steps improves control and spots errors before money leaves the business.

An inventory costing method that recalculates the average unit cost after each purchase, so goods are issued at the latest running average. It smooths cost fluctuations in a perpetual system.

An inventory method that tracks the actual cost of each individual item, used for high-value or unique goods such as vehicles or jewellery. It gives precise cost matching but is impractical for large volumes.

The loss of inventory between what the records show and what is physically present, caused by theft, damage, spoilage or error. It is recognised as a cost when identified at a stock count.

A retail metric measuring the gross margin earned for each unit of money invested in inventory, showing how profitably stock is being used. A GMROI above one means inventory earns more than it costs to hold.

The percentage of received inventory sold over a period, indicating how quickly stock moves. A high sell-through points to good demand or lean buying; a low rate signals overstocking.

An order for goods that cannot be filled immediately because they are out of stock, but which the customer is willing to wait for. Managing backorders well preserves sales that would otherwise be lost to stockouts.

Current assets divided by current liabilities, a measure of whether a business can meet obligations falling due within a year. Above 1 means current assets cover current liabilities; what counts as healthy varies sharply by industry.

A stricter liquidity test than the current ratio, dividing only cash, marketable securities and receivables by current liabilities. Inventory and prepayments are excluded because they cannot be relied on to convert to cash quickly. Also called the acid-test ratio.

Total liabilities divided by shareholders equity, showing how much of the business is funded by creditors against owners. A higher ratio raises returns when trading well and magnifies losses when it does not.

Earnings before interest, taxes, depreciation and amortisation: a proxy for operating cash generation that strips out financing and accounting policy choices. Widely used in valuation, but it is not a GAAP or IFRS measure and ignores both capital spending and working capital.

Profit from core trading activity: gross profit less operating expenses, before interest and tax. Also called operating profit or EBIT, it isolates how well the business performs independently of how it is financed.

The final profit figure after every expense, including cost of sales, operating costs, interest and tax. Also called net profit or the bottom line, and the figure that flows into retained earnings.

Gross profit as a percentage of revenue, calculated as revenue less cost of goods sold divided by revenue. It measures how much of each sale survives direct costs and is the first place to look when pricing or supplier costs move.

Revenue less variable costs, the amount each additional sale contributes toward fixed costs and then profit. The basis of break-even analysis: fixed costs divided by contribution margin per unit gives the volume needed to break even.

Costs that do not vary with output over the relevant range, such as rent, insurance and salaried staff. They create operating leverage, so profit rises faster than revenue once they are covered and falls faster when volume drops.

Costs that move more or less in proportion to volume, such as materials, per-unit labour, packaging and payment processing fees. Subtracting them from revenue gives contribution margin.

Total purchases or cost of sales divided by average accounts payable, showing how many times a year the business settles its supplier balances. A falling ratio can signal either deliberate cash conservation or genuine payment strain.

The average number of days a business takes to pay its suppliers, calculated as average accounts payable divided by cost of sales, times the days in the period. Stretching DPO funds working capital but risks supplier relationships and early-payment discounts.

The average number of days taken to collect payment after a sale, calculated as average accounts receivable divided by revenue, times the days in the period. Rising DSO is usually the earliest warning of a cash-flow problem.

Assigning materials, labour and overhead to a specific job, project or contract so profitability can be read per job rather than only in aggregate. Standard practice in construction, agencies, manufacturing to order and professional services.

The difference between the price actually paid for a purchase and the standard or expected price, times the quantity bought. A persistent unfavourable variance points at supplier pricing, buying practice, or an out-of-date standard cost.

Operating income as a percentage of revenue, showing how much profit a business makes from its core operations before interest and tax. It isolates operating efficiency from financing and tax effects.

Gross profit as a percentage of revenue, measuring how much is left after the direct cost of goods sold to cover operating expenses and profit. It reflects pricing power and production efficiency.

Net profit as a percentage of shareholders' equity, showing how much profit a business generates from the owners' invested capital. A higher ROE indicates more efficient use of equity, though leverage can inflate it.

Net profit as a percentage of total assets, measuring how efficiently a business uses everything it owns to generate profit. It is useful for comparing asset-intensive businesses.

Operating profit as a percentage of capital employed (equity plus long-term debt), showing how well a business turns its total long-term funding into operating profit. It is widely used to compare capital efficiency.

The gain from an investment relative to its cost, expressed as a percentage. A simple, general-purpose measure for comparing the payoff of different investments or projects.

Earnings Before Interest and Tax — a measure of operating profitability that strips out financing and tax effects. It is close to operating income and is used to compare the core performance of businesses with different capital structures.

EBITDA as a percentage of revenue, showing operating cash profitability before interest, tax, depreciation and amortization. It is widely used to compare businesses, though it ignores real capital costs.

The cash a business generates from its normal operating activities during a period, before investing and financing flows. Positive operating cash flow shows the core business funds itself.

The cash left after a business pays for the capital expenditure needed to maintain or grow its asset base. It is the cash genuinely available to repay debt, pay dividends or reinvest.

Interpreting the current ratio — current assets divided by current liabilities — to judge whether a business can meet its short-term obligations. A ratio comfortably above one is generally healthier, though the ideal varies by industry.

A stricter liquidity measure than the current ratio, excluding inventory from current assets because it may not convert quickly to cash. Also known as the quick ratio.

The most conservative liquidity ratio, comparing only cash and cash equivalents to current liabilities. It shows whether a business could cover short-term debts without relying on receivables or inventory.

Total liabilities as a proportion of total assets, showing how much of a business is financed by debt rather than equity. A higher ratio means greater financial leverage and risk.

A measure of how comfortably a business can pay interest on its debt from operating profit. A higher ratio means more cushion; a ratio near one signals that earnings barely cover interest.

A measure lenders use to see whether operating income covers total debt obligations, including principal and interest. A DSCR above one means income exceeds debt payments.

How many times a business sells and replaces its inventory over a period. A higher turnover generally indicates strong sales or lean stock, while a low figure may signal overstocking or slow demand.

Revenue generated per unit of total assets, measuring how efficiently a business uses its assets to produce sales. It is especially relevant for asset-heavy industries.

The number of days it takes a business to turn cash spent on inventory back into cash from customers. It combines days inventory outstanding and days sales outstanding, less days payable outstanding.

The average number of days a business holds inventory before selling it. A lower DIO means stock moves quickly; a higher DIO ties up cash in unsold goods.

A measure of the proportion of a business funded by debt relative to equity, indicating financial leverage. High gearing increases both potential returns and risk.

The ratio of a company's share price to its earnings per share, showing how much investors pay for each unit of profit. It is a common valuation yardstick, though it varies widely by sector and growth expectations.

A company's net profit divided by the number of shares outstanding, showing profit attributable to each share. It is a core input to valuation measures such as the P/E ratio.

The management of short-term assets and liabilities — inventory, receivables, payables and cash — to keep a business liquid and operating smoothly without tying up more funds than necessary.

Contribution margin as a percentage of sales, showing how much of each sales unit is left after variable costs to cover fixed costs and profit. It drives break-even and pricing analysis.

The gap between actual or budgeted sales and the break-even point, showing how far sales can fall before the business makes a loss. A larger margin of safety means lower risk.

The degree to which a business's costs are fixed rather than variable. High operating leverage means profits rise fast as sales grow past break-even — but fall just as fast when sales decline.

Comparing actual results against budget or standard figures and investigating the differences. It helps managers understand why performance differed from plan and where to act.

Comparing financial statement figures across multiple periods to spot trends and growth rates. It reads the accounts left to right, period over period.

Expressing each line of a financial statement as a percentage of a base figure — revenue for the income statement, total assets for the balance sheet — to compare structure across periods or businesses of different sizes.

Statements where every line is shown as a percentage of a base amount, making it easy to compare companies of very different sizes or to track how a cost structure shifts over time.

The value today of a project's expected future cash flows, discounted at a required rate of return, less the initial investment. A positive NPV means the project is expected to add value.

The discount rate at which a project's net present value is zero — effectively its expected percentage return. A project is generally attractive when its IRR exceeds the required rate of return.

The time it takes for a project's cash inflows to recover the initial investment. It is simple and widely used but ignores cash flows after payback and the time value of money.

A technique examining how changes in sales volume, costs and prices affect profit. It underpins break-even analysis and decisions on pricing, product mix and target profit.

The rate at which a business, often a startup, spends its cash reserves before reaching profitability. Gross burn is total cash spent; net burn is spending less any cash coming in.

How long a business can keep operating at its current net burn rate before it runs out of cash. It tells founders how much time they have to reach profitability or raise more funding.

The total profit a business expects to earn from a customer over the whole relationship. Comparing it to the cost of acquiring a customer shows whether growth spending is sustainable.

The average cost of winning a new customer, including sales and marketing spend divided by the number of customers acquired. It is central to judging the efficiency of growth.

The percentage of customers or recurring revenue lost over a period. Low churn is critical for subscription businesses, where retained customers compound into predictable revenue.

Gross margin measures profitability after only the direct cost of goods sold, while net margin is after all expenses, interest and tax. The gap between them shows the weight of operating and financing costs.

A family of ratios — current, quick and cash ratios — that measure a business's ability to meet short-term obligations from its short-term assets. They are early warning signs of cash trouble.

Ratios such as the debt ratio, gearing and interest coverage that assess whether a business can meet its long-term obligations and survive beyond the short term. They focus on capital structure and debt capacity.

Ratios such as gross margin, operating margin, net margin, ROE and ROA that measure how effectively a business turns revenue and resources into profit. They are the core of performance analysis.

Ratios such as inventory turnover, asset turnover and receivables turnover that measure how well a business uses its assets and manages its working capital to generate sales.

A framework that breaks return on equity into profit margin, asset turnover and financial leverage, revealing which of the three is really driving — or dragging — a company's return on equity.

The difference between a budgeted figure and the actual result. Favourable variances improve profit versus plan; adverse variances reduce it. Analysing them keeps spending and performance on track.

A forecast that is continually updated by adding a new period as each one ends, always looking the same distance ahead. It keeps planning current instead of fixed to a single annual budget.

A budgeting method where every expense must be justified from a zero base each period, rather than carried over and adjusted from last year's budget. It forces scrutiny of all spending but takes more effort.

The percentage of recurring revenue retained from existing customers over a period, including expansion and after churn and contraction. An NRR above 100% means the existing base grows even without new customers.

The percentage of recurring revenue retained from existing customers before counting any expansion, so it cannot exceed 100%. It isolates how much revenue is lost to churn and downgrades.

The annualised value of a customer contract, normalising deals of different lengths to a yearly figure. It helps compare and forecast recurring revenue across a customer base.

The full value of a customer contract over its entire term, including recurring and one-off charges. Unlike ACV it reflects the whole commitment rather than a single year.

A benchmark for software businesses holding that a company's revenue growth rate plus its profit margin should total at least 40%. It balances the trade-off between growing fast and being profitable.

The ratio of customer lifetime value to customer acquisition cost, showing how much value a customer returns for each unit spent to win them. A healthy ratio signals efficient, sustainable growth.

The time it takes to recover the cost of acquiring a customer from the gross profit that customer generates. A shorter payback means cash spent on growth comes back faster.

Additional recurring revenue earned from existing customers through upgrades, add-ons or increased usage. It is a key driver of net revenue retention and efficient growth.

Bookings are the value of contracts customers commit to; revenue is what is actually recognised as earned over time. The gap matters because a signed deal is not the same as recognised income.

Payments received in advance for software or services not yet delivered, recorded as a liability and recognised as revenue over the subscription period. It is central to subscription accounting.

The average rate a business pays to finance its assets, weighting the cost of equity and the cost of debt by their share of total capital. It is the common benchmark return used to evaluate investments.

The return shareholders require for investing in a business, reflecting its risk. It is a key input to WACC and to valuing a company's equity.

The effective interest rate a business pays on its borrowings, usually considered after tax because interest is generally tax-deductible. It feeds into the weighted average cost of capital.

A valuation method that estimates the value of an asset or business as the present value of its expected future cash flows, discounted at a rate reflecting their risk and the time value of money.

In a discounted cash flow valuation, the estimated value of all cash flows beyond the explicit forecast period, capturing the long-run value of a business as a going concern.

A measure of a company's total value including equity and debt, less cash. It reflects what it would cost to acquire the whole business and is used in multiples such as EV/EBITDA.

A valuation multiple comparing enterprise value to EBITDA, widely used to value businesses because it is unaffected by capital structure and non-cash charges. Lower multiples can indicate cheaper valuations.

A company's total debt less its cash and cash equivalents, showing the debt that would remain if available cash were used to pay it down. It is a cleaner gauge of leverage than gross debt.

A projection of the cash expected to flow into and out of a business over a future period, used to anticipate shortfalls and surpluses and to plan financing and spending.

Testing how a result — such as profit or a valuation — changes when one key assumption is varied, to see which assumptions matter most and how much risk they carry.

Building several plausible future cases — such as best, base and worst — and modelling the financial outcome of each, so a business can prepare for a range of conditions rather than a single forecast.

The process of evaluating and selecting long-term investments such as equipment or projects, using tools like NPV, IRR and payback to decide where to commit capital.

Amounts owed as a result of running payroll but not yet paid out: net wages, income tax withheld, social-security and pension contributions, and any garnishments. They are liabilities held on behalf of employees and agencies, not business expenses in their own right.

The entry recording a pay run, debiting gross wages and employer contributions to expense and crediting net pay plus each withholding and contribution liability. Settling those liabilities later is a separate entry that clears them to zero.

The US Federal Insurance Contributions Act tax funding Social Security and Medicare, withheld from employee wages and matched by the employer. The Social Security portion applies only up to an annual wage base, and an additional Medicare amount applies above a set income level; both figures are published yearly by the IRS and SSA.

The US Federal Unemployment Tax Act levy, paid by employers only and never withheld from employees, funding federal administration of unemployment benefits. It applies to a per-employee annual wage base, and employers paying state unemployment tax on time generally qualify for a substantial credit. Current rates and the wage base come from IRS Form 940 guidance.

State Unemployment Tax Act contributions, paid by employers to the state funds that finance unemployment benefits. Each state sets its own wage base and assigns an experience-rated percentage reflecting the employers claims history, so the cost differs by state and by employer.

The IRS form on which a US employee tells their employer how much federal income tax to withhold, reflecting filing status, dependents, multiple jobs and other adjustments. Employees should refile after life or income changes so withholding stays close to actual liability.

Pay As You Earn, the UK system under which employers deduct income tax and National Insurance from wages and report them to HMRC in real time on or before each payday. Tax codes issued by HMRC determine how much is withheld for each employee.

Australias Pay As You Go arrangements. PAYG withholding is tax an employer withholds from employee wages and remits to the ATO; PAYG instalments are periodic prepayments a business or individual makes against its own expected income tax.

The Australian regime requiring employers to report salary, tax withheld and superannuation to the ATO electronically each time they run payroll, rather than in an annual summary. Employees see the reported figures through their myGov income statement.

An employee's total earnings for a pay period before any deductions for tax, benefits or other withholdings. Net pay is what remains after those deductions.

The amount an employee actually receives after all deductions — taxes, social contributions, benefits and other withholdings — are taken from gross pay. Also called take-home pay.

The process of calculating and paying employee wages for a period, including computing gross pay, deductions and net pay, and generating payslips and payment instructions.

The recurring span of time over which employee pay is calculated — weekly, fortnightly, semi-monthly or monthly. It sets the cadence of payroll runs and affects how annual amounts are prorated.

A statement given to an employee each pay period detailing gross pay, individual deductions, and net pay, along with year-to-date totals. Many jurisdictions require employers to provide one.

A retirement savings scheme in India where both employee and employer contribute a percentage of basic wages to the Employees' Provident Fund. The accumulated balance, with interest, is paid out on retirement or exit.

An Indian social-security scheme providing medical and cash benefits to employees earning below a wage threshold, funded by employee and employer contributions on gross wages.

A lump-sum payment made by an Indian employer to an employee who has completed a minimum period of continuous service, calculated on last-drawn salary and years of service, payable on retirement or exit.

The fixed core component of an employee's pay, before allowances and bonuses. Many statutory calculations — provident fund, gratuity and others — are based on basic salary, so its proportion of the package matters.

The total annual cost an employer bears for an employee in India, including salary, allowances, employer contributions and benefits. It is larger than take-home pay because it includes costs the employee never receives in cash.

A cost-of-living adjustment paid to employees, chiefly in the Indian public sector, calculated as a percentage of basic pay and revised periodically to offset inflation.

An allowance Indian employers pay to cover an employee's travel costs within the country, which can be exempt from tax subject to conditions and limits under the old tax regime.

A declaration an Indian employee gives their employer of the deductions and allowances they intend to claim — such as HRA, LTA and investments — so the employer can compute TDS on salary correctly.

The process of settling all dues when an employee leaves — unpaid salary, leave encashment, gratuity and any recoveries — in a single closing calculation. It clears both parties' outstanding obligations.

Taxes and contributions levied on wages, which may be withheld from employees, borne by employers, or both. They typically fund social-security and related programmes.

Tax an employer or payer deducts from a payment and remits to the authorities on the recipient's behalf, so tax is collected as income is earned rather than only at filing.

A detailed record for each pay run listing every employee's gross pay, deductions and net pay. It is the source document for payroll journal entries and for reconciling payroll to the general ledger.

Additional pay for hours worked beyond the normal schedule, often at a premium rate set by law or contract. Correctly tracking and rating overtime is a common payroll compliance point.

A legal requirement that an employer withhold part of an employee's pay to satisfy a debt, such as a court order or tax levy, and send it to the relevant party before paying the rest to the employee.

The quarterly federal return US employers file to report wages paid and the income tax and FICA (Social Security and Medicare) taxes withheld and owed. It reconciles withholding to deposits made during the quarter.

The annual federal return US employers file to report and pay federal unemployment (FUTA) tax. It is separate from the income and FICA taxes reported on Form 941.

The US form an employee completes so the employer can determine how much federal income tax to withhold from their pay, based on filing status, dependents and other adjustments.

The US term for the statement accompanying a paycheck that itemises gross pay, taxes and other deductions, and net pay, with year-to-date figures. Equivalent to a payslip.

A US classification under the Fair Labor Standards Act. Non-exempt employees must receive overtime pay for hours over 40 a week; exempt employees, meeting salary and duties tests, do not. Misclassification is a common compliance risk.

The annual limit on wages subject to the Social Security portion of US FICA tax. Earnings above the base are not taxed for Social Security in that year, though Medicare tax continues to apply.

The value of non-cash benefits provided to an employee that must be treated as taxable income — such as personal use of a company car or certain group-term life cover — even though no cash changes hands.

A deduction taken from gross pay before income tax is calculated, such as certain retirement or health contributions, which lowers taxable wages. Post-tax deductions are taken after tax is computed.

Recording wages earned by employees but not yet paid at period end as an expense and a liability, so the cost falls in the period the work was done rather than when pay is disbursed.

Payment to an employee for accumulated unused leave, either during service or at exit. Its tax treatment varies by jurisdiction and by whether it is paid on retirement.

Setting aside the expected cost of employee bonuses over the period they are earned, rather than only when paid, so profit reflects the true cost of the work performed.

The electronic payment of wages straight into an employee's bank account on payday, instead of by cash or cheque. It speeds up payment and reduces handling cost and error.

The recurring end-to-end process of collecting time and pay data, calculating wages and deductions, paying employees, and filing the related tax reports for each pay period.

A bonus certain Indian employers must pay eligible employees under the Payment of Bonus Act, calculated within prescribed minimum and maximum percentages on qualifying wages.

A state-administered fund in several Indian states to which small periodic contributions are made by employees and employers, funding welfare measures for workers. Rates and applicability vary by state.

An IRS information return used to report various types of income other than wages. 1099-NEC is for non-employee compensation ($2,000+ to a contractor for payments made in 2026 onward; $600+ for 2025 and earlier). Businesses must file by January 31. HelloBooks tracks contractor payments for 1099 reporting.

An IRS form reporting wages paid to employees and taxes withheld. Employers must provide W-2s to employees by January 31 and file copies with the SSA.

The connection between a business and a state that requires the business to collect and remit sales tax. Nexus can be physical (office, warehouse) or economic (exceeding revenue/transaction thresholds). HelloBooks includes a nexus calculator.

An IRS provision allowing businesses to deduct the full purchase price of qualifying equipment and software in the year of purchase, rather than depreciating over time. HelloBooks includes a Section 179 calculator.

Quarterly tax payments made by self-employed individuals and businesses to cover income tax and self-employment tax. Due April 15, June 15, September 15, and January 15.

The IRS form on which a US person gives their name, address and taxpayer identification number to a business that will pay them, so the payer can report those payments correctly. Collecting a W-9 before the first payment is what makes accurate 1099 reporting possible, and a missing one can trigger backup withholding.

The IRS information return for miscellaneous payments such as rent, prizes, awards and certain legal or medical payments. Non-employee compensation moved to Form 1099-NEC, so contractor fees no longer belong here.

The IRS information return filed by payment settlement entities, including card processors and payment apps, reporting gross payment volume received by a business or seller. Gross volume excludes refunds and fees, so it will not match revenue, and the reporting threshold has changed repeatedly; check current IRS guidance for the year in question.

The schedule attached to IRS Form 1040 on which a sole proprietor or single-member LLC reports business income and expenses. Net profit flows to the owners personal return and is also the starting point for self-employment tax.

The US income tax return for an S corporation, which generally pays no federal income tax itself and instead passes income, deductions and credits to shareholders. Each shareholder receives a Schedule K-1 showing their share.

The US return of partnership income, filed by partnerships and most multi-member LLCs. The partnership reports results but does not pay the tax; each partner receives a Schedule K-1 and reports their share on their own return.

The statement issued by a partnership, S corporation or trust telling each partner, shareholder or beneficiary their share of income, deductions and credits. Recipients need it to complete their personal returns, so late K-1s commonly force extensions.

Periodic prepayments of US federal and state income tax made by those whose income is not subject to sufficient withholding, including the self-employed and many business owners. Paid on a quarterly schedule set by the IRS, with underpayment penalties for falling short.

A rule that protects a taxpayer from underpayment penalties if their prepayments meet a defined minimum, generally measured against either the current years liability or the prior years tax, with a higher prior-year test for higher earners. The precise percentages are set by the IRS and should be checked for the year concerned.

The connection between a business and a US state sufficient to create a tax obligation there. Physical nexus arises from premises, staff or inventory; economic nexus arises from exceeding a states sales or transaction thresholds, which differ by state and are published by each revenue department.

A platform that facilitates third-party sales and is required by state law to collect and remit sales tax on those sales instead of the seller. It relieves sellers of collection on marketplace orders but not of their own direct-channel obligations or registration requirements.

A tax owed by the purchaser on taxable goods or services bought without sales tax being charged, typically from an out-of-state seller. It is the counterpart to sales tax, set at the same rate, and is self-assessed on the buyers return.

A document a buyer gives a supplier to purchase inventory free of sales tax because the goods will be resold rather than consumed. The seller must keep the certificate on file; without valid documentation the seller carries the uncollected tax on audit.

Documentation supporting a sale made without sales tax because the buyer or the use qualifies for exemption, for example a non-profit, government body or manufacturing input. Rules and forms are state-specific, and the seller bears the burden of holding a valid certificate.

The US information return used to report non-employee compensation paid to independent contractors and other non-employees. Businesses file it for qualifying payments and furnish a copy to the recipient by the deadline.

A US information return reporting interest income of a threshold amount or more paid during the year, typically issued by banks and other payers to the recipient and the IRS.

A US information return reporting dividends and certain distributions paid to a taxpayer during the year, used by recipients to report investment income on their return.

The US tax schedule a sole proprietor or single-member LLC uses to report the income and expenses of a business, with the resulting profit or loss flowing to the owner's individual return.

The US schedule used to calculate self-employment tax — the Social Security and Medicare contributions owed by self-employed people on their net earnings.

The US Social Security and Medicare tax paid by self-employed individuals on net self-employment earnings, covering both the employee and employer shares that an employer would otherwise split.

A US deduction under Section 199A allowing eligible owners of pass-through businesses to deduct a portion of their qualified business income, subject to income thresholds and limitations.

A fixed amount US taxpayers can subtract from income instead of itemising deductions, varying by filing status and adjusted annually. Taxpayers choose whichever is larger — the standard deduction or itemised deductions.

Specific US deductions — such as mortgage interest, state and local taxes within limits, and charitable gifts — claimed in place of the standard deduction when they total more, reducing taxable income.

A US taxpayer's total gross income less specific above-the-line adjustments. AGI is the starting point for many deductions, credits and phase-out thresholds.

The amount of income on which tax is actually calculated, after subtracting deductions from gross or adjusted gross income. Tax rates and brackets apply to this figure, not to total income.

The rate of tax applied to the next unit of income — the bracket the last dollar earned falls into. It differs from the effective rate, which is total tax as a share of all income.

Total tax paid as a percentage of total income, giving the average rate across all brackets. It is usually lower than the marginal rate because earlier income is taxed at lower rates.

A deduction reduces taxable income, so its value depends on the tax rate; a credit reduces the tax bill directly, dollar for dollar. Credits are generally worth more than deductions of the same amount.

The main US individual income-tax return, on which taxpayers report income, claim deductions and credits, and calculate the tax owed or refund due for the year.

The US federal income-tax return filed by C corporations to report income, deductions and the corporate tax owed. S corporations instead file Form 1120-S.

The US form a business requests from a contractor or vendor to collect their taxpayer identification number and certification, so the business can correctly report payments on a 1099 and avoid backup withholding.

A requirement to withhold a flat percentage of certain US payments and remit it to the IRS when a payee has not supplied a valid taxpayer identification number or is otherwise flagged. It ensures tax is collected despite missing details.

The Modified Accelerated Cost Recovery System, the standard US tax method for depreciating most business assets, which assigns assets to classes with set recovery periods and accelerated schedules.

A US provision letting businesses deduct a large percentage of the cost of qualifying assets in the first year, on top of or instead of regular depreciation. The applicable percentage has changed over time and should be checked for the year.

A US corporation taxed as a separate entity, paying corporate income tax on its profits, with shareholders then taxed on dividends — the classic double taxation. It contrasts with pass-through structures.

A US corporation that elects to pass income, deductions and credits through to shareholders, who report them on their individual returns, avoiding corporate-level income tax. Eligibility rules and an election are required.

How a US limited liability company is taxed, which is flexible: a single-member LLC is taxed by default as a sole proprietorship, a multi-member LLC as a partnership, and either can elect corporate or S-corp treatment.

A business whose income is not taxed at the entity level but passes through to the owners, who report it on their own returns. Sole proprietorships, partnerships, S corporations and most LLCs are pass-throughs.

A US information return reporting distributions from pensions, annuities, retirement plans and similar accounts, used by recipients to report retirement income.

Sales tax is collected by a seller at the point of sale; use tax is owed by the buyer on taxable goods where sales tax was not charged, such as out-of-state purchases. Use tax prevents avoidance by buying across state lines.

A US sales-tax concept where a business must register and collect tax in a state once its sales or transactions there exceed set thresholds, even without a physical presence. It expanded sharply after the Wayfair decision.

The level of payments processed through cards or third-party networks above which a payment settlement entity must issue a Form 1099-K. The threshold has been the subject of phased changes and should be checked for the year.

A US penalty for not paying enough tax during the year through withholding and estimated payments. Meeting a safe-harbor amount based on prior-year or current-year tax generally avoids it.

The US information return a partnership files to report its income, deductions and credits. The partnership itself pays no income tax; each partner receives a Schedule K-1 reporting their share.

The US rule that when a depreciated asset is sold for more than its written-down value, the previously claimed depreciation is taxed, often at ordinary rates, rather than as capital gain.

A US deduction for the business use of part of a home, available to qualifying self-employed taxpayers using either a simplified square-footage method or actual expenses, subject to exclusive-use rules.

A federal tax identification number the IRS issues to US businesses for filing returns, hiring employees and opening bank accounts. It functions like a Social Security number for a business.

The US form a business files to request an automatic extension of time to file certain business income-tax returns. It extends the filing deadline but not the time to pay any tax owed.

The US form used to claim depreciation and amortization, including the Section 179 expense election and bonus depreciation, for assets placed in service during the year.

A US filing requiring many companies to report information about their beneficial owners to FinCEN. Scope, deadlines and applicability have been subject to change and should be confirmed against current guidance.

The US form and vouchers individuals use to calculate and pay estimated quarterly taxes on income not subject to withholding, such as self-employment or investment income.

An IRS per-mile rate businesses and self-employed taxpayers can use to deduct the cost of operating a vehicle for business instead of tracking actual expenses. The rate is set annually.

A US provision letting a new business deduct a limited amount of qualifying startup and organisational costs in its first year, amortising the remainder over a set period.

A US employee expense-reimbursement arrangement that meets IRS rules so reimbursements are not treated as taxable wages. It requires a business connection, substantiation and return of any excess.

A US tax loss arising when deductible expenses exceed taxable income. NOLs can generally be carried forward to offset future taxable income, subject to limitations that have changed over time.

A US provision allowing capital losses that exceed the amount deductible in a year to be carried forward to offset capital gains and limited ordinary income in later years.

The IRS requirement that an S-corporation owner-employee be paid a reasonable salary for their work before taking profit distributions, preventing avoidance of payroll taxes by underpaying wages.

A US tax election letting businesses expense lower-cost asset purchases immediately, up to a per-item threshold, rather than capitalising and depreciating them, simplifying fixed-asset accounting.

A calendar tax year runs January to December; a fiscal year is any 12-month period a business chooses for reporting and tax. The choice affects filing deadlines and how seasonal results are presented.

India's unified indirect tax replacing multiple central and state taxes. After the GST 2.0 rationalisation (effective 22 September 2025) it applies at 0%, 5%, 18%, and 40% rate slabs, plus special rates for precious stones and metals (0.25% / 1.5% / 3%). Includes CGST (central), SGST (state), and IGST (inter-state). HelloBooks fully supports GST compliance.

Central GST (CGST) and State GST (SGST) are levied equally on intra-state supplies. For example, 18% GST on a local sale = 9% CGST + 9% SGST. Both go to different government levels.

GST levied on inter-state supplies and imports. IGST equals the full GST rate (e.g., 18% IGST vs 9% CGST + 9% SGST). The central government distributes the state portion to the destination state.

Smarter accounting for growing businesses

Same rate. Different heads.

Intra-state supply

Supplier and place of supply in the same state

• CGST 9% = ₹900 (to the Centre)
• SGST 9% = ₹900 (to the State)
• Total GST ₹1,800 on the invoice

Split equally between Centre and State

or

Inter-state supply

Place of supply in a different state (and imports/exports)

• IGST 18% = ₹1,800 (collected by the Centre)
• Settled to the destination state
• IGST credit used against IGST first, then CGST / SGST

One integrated tax, destination-based

Example: ₹10,000 taxable at 18%.

A 15-digit GST Identification Number assigned to every registered taxpayer in India. Format: 2 digits state code + 10 digits PAN + 1 digit entity number + 1 blank + 1 check digit. Must appear on all GST invoices.

A monthly or quarterly return filed by registered dealers reporting all outward supplies (sales). Must be filed by the 11th of the following month. HelloBooks exports GSTR-1 data directly from your invoices.

A monthly self-declaration return summarizing outward supplies, input tax credit claimed, and net tax payable. Filed by the 20th of the following month. HelloBooks generates GSTR-3B summaries from your transaction data.

The GST paid on business purchases that can be offset against GST collected on sales. Reduces your net GST liability. ITC is only available if the supplier has filed their return and the invoice is valid.

Smarter accounting for growing businesses

Four ticks = claim.

1. Step 1

   Tax invoice

   Invoice or debit note from a registered supplier

2. Step 2

   Goods received

   For instalments, ITC arises on the last one

3. Step 3

   Shows in GSTR-2B

   Proof the supplier reported the tax

4. Step 4

   GSTR-3B filed

   You furnish the return for that period

5. Step 5

   Paid in 180 days

   Otherwise reverse with interest, re-avail on payment

   Proviso to 16(2)

Miss one and the credit is blocked or reversed.

Harmonized System of Nomenclature — a 4-8 digit code classifying goods for GST purposes. Required on GST invoices based on annual turnover. HelloBooks includes a searchable HSN code database.

Service Accounting Code — a 6-digit code classifying services under GST (similar to HSN for goods). Required on service invoices. Example: 998311 for management consulting.

Tax deducted by the payer at the time of payment to the government. Common TDS rates: 1% (purchase of goods above Rs. 50 lakh), 2% (contractors), 10% (professional services). HelloBooks tracks TDS on purchases and sales.

Smarter accounting for growing businesses

Deduct. Deposit. File.

1. Step 1

   Deduct

   Withhold at the section rate when you pay or credit

2. Step 2

   Deposit

   Challan 281, one per section

   By the 7th
3. Step 3

   Quarterly return

   24Q, 26Q, 27Q (27EQ for TCS)

4. Step 4

   Certificate

   Form 16 (salary) / 16A (non-salary)

5. Step 5

   Payee credit

   Reflects in the payee’s 26AS / AIS

March deductions are due by 30 April, not 7 April.

Miss a step and the payee's credit — or your expense deduction — is at risk.

Tax collected by the seller from the buyer at the time of sale. Applies to specific goods (scrap, minerals) and e-commerce operators. HelloBooks supports TCS calculation and reporting.

An electronic invoicing system where B2B invoices are registered on the GST Invoice Registration Portal (IRP). Each invoice gets an IRN (Invoice Reference Number) and signed QR code. Mandatory for businesses above Rs. 5 crore turnover.

Smarter accounting for growing businesses

Save. Register. Ship.

1. Step 1

   Save invoice

   B2B invoice raised in HelloBooks

2. Step 2

   Build JSON

   Payload built in the INV-01 schema

3. Step 3

   IRP validates

   GSTIN, place of supply, tax maths, HSN

4. Step 4

   IRN + signed QR

   Written back onto the printed invoice

5. Step 5

   Flows onward

   E-way bill, GSTR-1 and the buyer's GSTR-2B

Rejected by the IRP? The error code shows on the invoice itself so your team can fix and retry.

One invoice record → e-invoice, e-way bill and GSTR-1.

An electronic document required for transporting goods worth more than Rs. 50,000 within or between states. Generated on the GST portal. HelloBooks auto-generates e-way bills with delivery challans.

Smarter accounting for growing businesses

Move goods without the checkpost stress.

Part A — consignmentGSTINs, invoice, value, HSN+Part B — transportMode, vehicle no., transporter ID=Valid e-way bill1 day per 200 km

Example: a 450 km inter-state haul → 450 ÷ 200 = 2.25, rounded up = 3 days of validity, counted from when Part B is filled.

• ThresholdGoods worth more than ₹50,000 per consignment (some states set their own intra-state limit).
• Extension windowExtend from 8 hours before to 8 hours after expiry.
• CancellationWithin 24 hours if the goods have not moved or verified in transit.

The Indian GST provision making the recipient, rather than the supplier, liable to pay tax on specified supplies, including certain services such as legal and goods transport agency services, and purchases from unregistered suppliers. The recipient pays in cash and may then claim input tax credit subject to the usual conditions.

A supply taxed at zero per cent where the supplier may still reclaim input tax, in India covering exports and supplies to Special Economic Zones. Zero-rating preserves input credit, which is what distinguishes it from an exempt supply.

A supply on which no GST is charged and for which related input tax credit cannot be claimed. Because credit is blocked, embedded tax becomes a cost, making exemption materially different from zero-rating.

A simplified GST option for smaller Indian taxpayers that substitutes a flat rate on turnover for normal rate-wise tax, with reduced filing. Participants cannot collect GST from customers or claim input tax credit, and eligibility turnover limits and rates are set by the GST Council.

The rule determining where a supply is treated as made, which decides whether CGST and SGST or IGST applies. It turns on goods movement or, for services, on recipient location and specific rules for immovable property, events, transport and digital services. Getting it wrong produces tax paid under the wrong head.

Giving back input tax credit already claimed, required where goods are used for exempt or personal purposes, where a supplier is not paid within the prescribed period, on credit notes received, or for stock written off. Reversals are reported in the GST return and may carry interest.

The consignment value above which an electronic waybill must be generated before goods are moved in India. A central threshold applies to inter-state movement while states set their own intra-state limits and exemptions, so the applicable figure must be checked against the current CBIC notification and the relevant state rule.

The Invoice Reference Number, a unique hash returned by the Invoice Registration Portal when an e-invoice is registered, together with a signed QR code. An invoice requiring e-invoicing has no legal validity without a valid IRN.

An annual tax statement from the Indian Income Tax Department showing tax deducted at source, tax collected at source, advance tax and self-assessment payments credited against a PAN. Reconciling it before filing is what catches credits a deductor has reported incorrectly or not at all.

A broader statement than Form 26AS, presenting information the Income Tax Department holds about a taxpayer including interest, dividends, securities and property transactions, with a facility to submit feedback on entries that are wrong.

Indian income tax paid during the year in instalments rather than at filing, required once estimated liability after credits exceeds a prescribed amount. Instalment due dates and the cumulative percentage payable by each are set in the Income-tax rules, with interest charged for shortfall or deferment.

The Tax Deduction and Collection Account Number, a ten-character identifier that any person deducting or collecting tax at source in India must obtain and quote on TDS returns, challans and certificates. Separate from PAN, and required before any TDS can validly be deposited.

An auto-populated, read-only statement of inward supplies generated for a GST-registered buyer from the GSTR-1 filings of their suppliers. It is dynamic — it keeps updating as suppliers file or amend their returns — and is used to verify the input tax credit a business is claiming.

A static, auto-drafted input tax credit statement generated monthly for a GST-registered buyer. Unlike GSTR-2A it does not change after its cut-off date, so it gives a fixed view of the credit available for a tax period and is the basis most taxpayers use to claim ITC in GSTR-3B.

The annual return filed by taxpayers registered under the GST composition scheme. It summarises the year's outward supplies and tax paid at the flat composition rate, and replaced the earlier quarterly composition return.

The GST return filed by a non-resident taxable person registered in India for a short period. It reports outward and inward supplies and the tax payable during the registration period.

The monthly return filed by an Input Service Distributor (ISD) reporting the input tax credit received and the manner in which it has been distributed to the branches or units that share a common PAN.

The monthly return filed by persons required to deduct tax at source (TDS) under GST. It reports the GST-TDS deducted, the deductees, and the tax deposited, and lets the deductee claim the deducted amount as credit.

The monthly return filed by e-commerce operators who collect tax at source (TCS) under GST. It reports supplies made through the platform and the TCS collected on behalf of the sellers.

The annual GST return consolidating a regular taxpayer's monthly or quarterly returns for a financial year. It reconciles outward supplies, input tax credit and tax paid across the year into a single statement.

A GST reconciliation statement that ties the figures in the annual return (GSTR-9) to the taxpayer's audited financial statements. It applies to taxpayers above a prescribed turnover and is filed on a self-certification basis.

The final return filed when a GST registration is cancelled or surrendered. It reports stock held and any tax payable on that stock as on the date registration ends, closing out the taxpayer's GST obligations.

The inward-supplies return originally envisaged in the GST design, where a buyer would report purchases to match against supplier data. Its filing was suspended, and the system instead relies on the auto-drafted GSTR-2A and GSTR-2B for input credit.

The quarterly statement-cum-challan through which a composition taxpayer in India pays GST on turnover. It replaced the earlier quarterly composition return, with the detailed annual position now reported in GSTR-4.

A GST registration used by a head office to receive invoices for common input services and distribute the related input tax credit to the branches or units that actually use them. The ISD does not supply goods or services itself; it only allocates credit.

A declaration filed by an exporter in India to make zero-rated supplies (exports or supplies to SEZs) without paying integrated GST upfront. It avoids blocking working capital in a tax that would otherwise have to be claimed back as a refund.

The form used to make a voluntary or prompted payment of GST — for example to settle a shortfall found during reconciliation, pay interest, or respond to a notice — outside the normal return. It records the payment and the reason against the taxpayer's ledger.

The online ledger on the GST portal that holds money a taxpayer has deposited to meet tax, interest, penalty and fee liabilities. Amounts move into it when challans are paid and out of it when liabilities are set off.

The online ledger on the GST portal that records a taxpayer's available input tax credit. Credit flows in from eligible purchases and is used to set off output tax liability, subject to the rules on the order of utilisation.

The GST portal ledger that records all tax, interest, penalty and other amounts a taxpayer owes for a period, and shows how those liabilities have been discharged from the cash and credit ledgers.

A cess levied on certain goods such as tobacco, aerated drinks and some motor vehicles, over and above the normal GST. It funds compensation to states for revenue shortfalls and has its own credit rules — cess credit can only be used against cess liability.

A section of the GST outward-supply return that aggregates sales by Harmonised System of Nomenclature code, showing quantity, taxable value and tax for each code. The level of HSN detail required depends on the taxpayer's turnover.

The bands into which goods and services are classified for GST in India. After the GST 2.0 rationalisation effective 22 September 2025 the main slabs are 0%, 5%, 18% and 40%, with special rates of 0.25%, 1.5% and 3% for precious stones and metals.

A supply that attracts a GST rate of zero per cent under the tariff. It differs from a zero-rated supply (exports/SEZ, where input credit is preserved) and from an exempt supply, and the distinction affects how input tax credit is treated.

Under GST, two or more individual supplies sold together for a single price that are not naturally bundled. A mixed supply is taxed at the rate of the item carrying the highest GST rate in the bundle.

Under GST, a supply of two or more goods or services that are naturally bundled and supplied together in the ordinary course of business, with one being the principal supply. The whole supply is taxed at the rate of the principal supply.

The aggregate turnover above which a business must register for GST in India. Separate limits apply for goods and services and for special-category states, and some businesses must register regardless of turnover. The applicable limit should be checked against the current notification.

A person who occasionally supplies goods or services in a state or union territory where they have no fixed place of business — for example at an exhibition or seasonal event. They must register in advance and deposit estimated tax for the period.

A person based outside India who occasionally supplies goods or services in India without a fixed place of business there. Registration is required ahead of supplies, with an advance tax deposit, and the return filed is GSTR-5.

Tax deducted at source under GST by specified recipients — such as government departments and certain public-sector bodies — on payments for taxable supplies above a threshold. It is reported in GSTR-7 and credited to the supplier.

Tax collected at source under GST by e-commerce operators on the net value of taxable supplies made through their platform by other sellers. It is reported in GSTR-8 and credited to the seller's electronic cash ledger.

A document issued instead of a tax invoice when a supplier cannot charge GST — for example a composition dealer, or a supplier of exempt goods. It looks like an invoice but does not show a separate GST charge because no tax is collected.

A document a recipient issues when paying a supplier under the reverse-charge mechanism, recording the payment on which the recipient is itself liable to pay GST. It supports the recipient's reverse-charge tax entry.

A document issued when a supplier receives an advance payment for a supply that has not yet been made. It records the advance and the GST treatment that applies at the time of receipt.

A claim to recover GST where credit or cash has accumulated that cannot be used — commonly on exports, supplies to SEZs, or an inverted duty structure. Refund claims are filed online and are subject to verification and time limits.

A situation where the GST rate on a business's inputs is higher than the rate on its finished output, causing input tax credit to pile up. The rules allow a refund of the accumulated credit arising from such an inverted structure, subject to conditions.

Input tax credit a buyer claimed before the corresponding invoice was reflected in their auto-drafted statement. Rule changes have progressively tightened this, so credit is now largely restricted to invoices actually appearing in GSTR-2B.

Categories of input tax credit that GST law specifically disallows even when used for business, such as credit on certain motor vehicles, personal consumption, and some works-contract and construction inputs. Businesses must identify and exclude these from their claims.

A GST provision requiring businesses to pass on the benefit of a rate cut or additional input tax credit to customers through lower prices, rather than keeping it as extra margin. Compliance is monitored by the designated authority.

A state in which a taxpayer's GST registration is temporarily inactive — for example after applying for cancellation or when the department initiates cancellation. During suspension the taxpayer generally cannot issue tax invoices or claim credit.

A time-limited relief the government periodically offers to let taxpayers regularise past GST non-compliance — such as late returns — with reduced or waived late fees. Terms vary by scheme and are set by notification.

The Quarterly Return Monthly Payment scheme under GST, which lets smaller taxpayers file GSTR-1 and GSTR-3B quarterly while paying tax monthly through a simple challan. It reduces filing frequency for eligible businesses.

A facility under the QRMP scheme that lets quarterly filers upload their B2B invoices in the first two months of a quarter, so their buyers can see the credit sooner instead of waiting for the quarterly GSTR-1.

A lookup that maps a good or service — usually via its HSN or SAC code — to the applicable GST rate. It helps businesses apply the correct slab on invoices and avoid under- or over-charging tax.

The Services Accounting Code used to classify services under GST, the services counterpart to the HSN code for goods. The correct SAC determines the GST rate and is reported on service invoices and in returns.

The aggregate turnover above which B2B e-invoicing is mandatory under GST, requiring invoices to be registered on the Invoice Registration Portal to obtain an IRN. The threshold has been lowered in stages and should be checked against the current notification.

An authorised intermediary that connects businesses and software to the GST Network's systems for filing returns, generating e-way bills and registering e-invoices. GSPs provide the secure API layer many compliance tools build on.

The organisation and technology platform that runs the IT backbone of India's GST — registration, return filing, tax payment and the ledgers. It is the system taxpayers and their software interact with for GST compliance.

A unique number issued to acknowledge an application on the GST portal — for registration, amendment, refund or similar. It is used to track the status of the application until it is processed.

The process of ending a GST registration, either voluntarily (business closed, turnover below threshold) or by the department (non-filing, fraud). A final return in GSTR-10 is required to settle tax on stock held at cancellation.

A change to GST registration details or to previously filed return data. Core registration fields may need departmental approval, while invoice-level corrections are made through amendment tables in subsequent returns within prescribed time limits.

The Indian income-tax provision requiring tax to be deducted at source on payments to contractors and sub-contractors for carrying out work, including supply of labour. Different rates apply to individuals/HUF and to other entities, and small single and annual aggregate payments are outside its scope.

The provision for deducting tax at source on fees for professional or technical services, royalty and certain other payments in India. A lower rate typically applies to technical-service fees than to professional fees, subject to the prescribed threshold.

The provision for deducting tax at source on commission or brokerage payments in India, other than insurance commission. A threshold applies below which no deduction is required.

The provision for deducting tax at source on rent paid in India above a prescribed annual threshold. Separate rates apply to rent for plant and machinery and to rent for land, buildings or furniture.

The provision requiring a buyer with turnover above a prescribed limit to deduct tax at source on purchases of goods from a resident seller beyond an annual value threshold. It interacts with the seller's TCS obligation under 206C(1H), with rules on which applies.

The provision under which an employer deducts tax at source from salary based on the employee's estimated annual income and chosen tax regime. Unlike most TDS sections it has no flat rate — tax is deducted at the employee's average slab rate over the year.

The provision for deducting tax at source on interest other than interest on securities — for example interest paid by banks on deposits or by businesses on loans — above a prescribed threshold.

The provision governing deduction of tax at source on payments to non-residents in India. Rates depend on the nature of income and any applicable Double Taxation Avoidance Agreement, and a reporting form is required for remittances abroad.

The provision requiring sellers of specified goods — and, under 206C(1H), sellers above a turnover limit on large sales of goods — to collect tax at source from buyers. The collected tax is credited to the buyer against their tax liability.

The TDS certificate an employer issues to an employee in India, summarising salary paid and tax deducted at source during the financial year. Part A shows the TDS deposited and Part B details the salary and deductions used to compute it.

The TDS certificate issued for tax deducted at source on income other than salary — such as interest, rent, commission or professional fees. It is generated from the deductor's TDS return and shows the tax credited against the recipient's PAN.

The quarterly TDS return an employer files in India reporting tax deducted from salaries under Section 192. The annual (fourth-quarter) filing includes detailed salary and deduction information used to generate Form 16.

The quarterly TDS return for tax deducted on payments to residents other than salary — interest, contractor payments, professional fees, rent and similar. It feeds the credits that appear in payees' Form 26AS.

The quarterly TDS return for tax deducted on payments to non-residents, reporting deductions under Section 195 and related provisions along with details needed for treaty relief.

A simplified, category-wise summary of the data in the Annual Information Statement (AIS), giving a taxpayer a processed view of their reported income and transactions to help pre-fill and check the income-tax return.

The simplest Indian income-tax return form, for resident individuals with income from salary, one house property, and other sources within prescribed limits. It cannot be used by those with business income or capital gains beyond the allowed scope.

The income-tax return form for individuals and Hindu Undivided Families who have income from a proprietary business or profession, in addition to other heads of income.

The income-tax return form for resident individuals, HUFs and firms (other than LLPs) opting for presumptive taxation of business or professional income under Sections 44AD, 44ADA or 44AE, within the prescribed turnover limits.

A presumptive taxation scheme letting eligible small businesses in India declare income at a prescribed percentage of turnover instead of maintaining detailed books. A lower percentage applies to digital receipts to encourage non-cash turnover.

A presumptive taxation scheme for eligible professionals in India, allowing income to be declared at a prescribed percentage of gross receipts up to a turnover limit, without maintaining full books of account.

The provision requiring a tax audit of accounts where a business's or professional's turnover or receipts exceed prescribed limits, or in certain presumptive-scheme situations. The audit report is filed in the prescribed form before the return.

A deduction under India's old tax regime for specified investments and payments — such as life insurance premiums, provident fund, ELSS and certain tuition fees — up to an annual ceiling, reducing taxable income.

A deduction for health-insurance premiums and certain preventive health check-up and medical expenses in India, with separate limits for self and family and for senior-citizen parents.

The choice Indian individual taxpayers make between the old regime (higher slab rates but most deductions and exemptions available) and the new regime (lower slab rates but most deductions withdrawn). The better option depends on the deductions a taxpayer can actually claim.

A flat deduction from salary and pension income available to Indian taxpayers without the need to prove expenses. The amount and its availability under each tax regime are set by the Finance Act and should be checked for the year concerned.

A partial exemption from tax on House Rent Allowance received by salaried employees in India under the old regime, computed as the least of the actual HRA, rent paid over a threshold, and a percentage of salary that depends on the city.

A simplified method of taxing income at a deemed percentage of turnover or receipts rather than on actual profit computed from full books. It reduces compliance for eligible small businesses and professionals within prescribed limits.

A tax ensuring companies with large book profits but low taxable income due to exemptions still pay a minimum amount, computed on adjusted book profit. Credit for MAT paid can be carried forward and set off in later years.

A tax formerly levied on Indian companies when they distributed dividends. The system was changed so that dividends are now taxed in the hands of shareholders rather than through DDT at the company level.

Tax on the profit from selling a capital asset such as property, shares or mutual funds in India. Gains are classified as short-term or long-term based on a holding period that varies by asset, with different rates and indexation rules.

A method of adjusting the purchase cost of a long-term capital asset for inflation using a notified cost-inflation index, so that only the real gain is taxed. Its availability depends on the asset class and the rules in force.

A ten-character alphanumeric identifier issued by the Indian Income Tax Department to track a taxpayer's financial transactions. It is required for filing returns, high-value transactions, and most TDS and GST interactions.

The provision governing the obligation and due dates for filing income-tax returns in India, including who must file, belated returns, revised returns and updated returns, each with its own time limits and conditions.

An income-tax return filed after the original due date but within the extended limit allowed by law in India. A late-filing fee and interest may apply, and some losses cannot be carried forward if the return is belated.

A return filed to correct an error or omission in an income-tax return already submitted, within the time limit allowed. It replaces the original return for the year.

A facility allowing Indian taxpayers to file or correct a return for a past year beyond the normal revision window, generally on payment of additional tax. It cannot be used to reduce tax or claim a refund.

The balance of income tax a taxpayer pays on their own computation before filing the return, after accounting for TDS, TCS and advance tax already paid. Interest may apply on amounts not covered by advance tax.

Interest charged under India's income-tax law for late filing of the return (234A), shortfall in payment of advance tax (234B), and deferment of advance-tax instalments (234C). Each is computed differently on the shortfall.

A state-level tax on income from employment, trade or profession levied by several Indian states, usually deducted by employers from salary and deposited with the state. Rates and slabs vary by state.

The process of obtaining a Tax Deduction and Collection Account Number, which any person deducting or collecting tax at source in India must hold before depositing TDS or TCS and filing the related returns.

Self-declarations an Indian resident can give to a deductor (such as a bank) to request no TDS on interest when their total income is below the taxable limit. Form 15H is for senior citizens and 15G for others who qualify.

A certificate the Indian tax authority issues allowing a payee's income to suffer TDS at a lower rate or nil, where their estimated tax liability justifies it. The deductor applies the certificate rate for the period it covers.

Tax deducted each month by an employer from an employee's salary in India under Section 192, based on projected annual income, declared investments and the chosen tax regime, so that the year's liability is spread across pay periods.

A levy India applies to certain payments to non-resident digital service providers — historically on online advertising and, in a later form, on e-commerce supply. Its scope has changed over time and should be checked against the current law.

A deduction for donations to specified funds and charitable institutions in India, available at either 50% or 100% of the donation depending on the recipient, sometimes subject to a qualifying-amount limit.

A form filed to claim relief under Section 89 of India's income-tax law when salary is received in arrears or in advance, spreading the tax effect so the taxpayer is not pushed into a higher bracket by the lump sum.

An amendment facility that lets a supplier correct or add details to a GSTR-1 for a tax period before the corresponding GSTR-3B is filed, so outward-supply data can be fixed without waiting for a later period.

A fee charged for filing a GST return after its due date, accruing per day up to a cap that depends on the return and the taxpayer's turnover. It is separate from interest on unpaid tax.

Interest payable on GST paid late or on excess input tax credit wrongly claimed and utilised, charged at the notified rate from the due date until payment. It is distinct from the late fee for delayed filing.

A notice the GST department issues asking a taxpayer to explain why tax, interest or penalty should not be demanded, before an order is passed. Responding within the time allowed is essential to contest the demand.

An examination of a registered taxpayer's records to verify that turnover, tax paid, refunds and input tax credit are correct. It may be conducted by the department or required based on turnover under the law in force.

The total value of all taxable, exempt, export and inter-state supplies under a single PAN across India, excluding GST itself. It determines registration liability and eligibility for schemes like composition and QRMP.

The challan used in India to deposit tax deducted or collected at source with the government, identifying the type of deduction and the period. Its details must match the TDS return for credit to flow to deductees.

A provision requiring tax to be deducted at a higher rate when the payee has not filed income-tax returns as specified, intended to push non-filers into compliance. A companion provision applies to TCS.

The bands of income taxed at progressively higher rates under India's individual income tax. The slab rates differ between the old and new regimes and are set by the Finance Act each year.

A rebate that reduces or eliminates income tax for resident individuals whose total income is within a prescribed limit, effectively making income up to that level tax-free. The limit differs by regime and year.

An additional charge on income tax applied to taxpayers whose income exceeds high thresholds in India, levied as a percentage of the tax itself and rising in steps with income.

A cess levied as a percentage on the income tax (plus surcharge) payable in India, earmarked for health and education spending. It applies on top of the computed tax for most taxpayers.

The set of income-tax deductions in India grouped under Chapter VI-A — including Sections 80C, 80D, 80G and others — that reduce gross total income, chiefly under the old regime.

A deduction for contributions to India's National Pension System, including an additional deduction over the Section 80C ceiling and a separate deduction for employer contributions, subject to limits.

A deduction for interest paid on a housing loan against income from house property in India, subject to a cap for a self-occupied property under the old regime.

A requirement for a buyer to deduct tax at source on the purchase of immovable property in India above a value threshold, depositing it against the seller's PAN.

A tax levied in India on the purchase and sale of securities such as shares and derivatives on recognised exchanges, collected at the time of the transaction.

Forms used for foreign remittances from India — 15CA is the remitter's declaration and 15CB is a chartered accountant's certificate on the taxability and tax withheld — required for many payments to non-residents.

Registration of a micro, small or medium enterprise in India under the Udyam system, giving access to benefits such as priority lending and protection on delayed payments. Classification is based on investment and turnover.

Tax collected at source on certain outward remittances under India's Liberalised Remittance Scheme and on overseas tour packages, at rates that depend on the purpose and amount. It is credited against the remitter's tax.

A GST return filed for a period in which a taxpayer had no outward supplies, no tax liability and no input tax credit to claim. Filing it keeps the registration compliant even when there is no activity.

Processing or treatment of goods belonging to another registered person. GST has specific rules allowing a principal to send inputs to a job worker without immediate tax, provided the goods return within prescribed time limits.

A declaration a principal files to report goods sent to and received from a job worker under GST. It supports the tax-free movement of inputs for job work and tracks compliance with the return timelines.

The GST treatment of advances received for a supply. For services, tax is generally due when an advance is received; rules for goods have changed over time, so the current position should be confirmed.

A scannable code required on certain B2C invoices under GST that lets a customer pay digitally, aimed at promoting electronic payments. Applicability depends on the supplier's turnover.

The provision setting out India's new personal income-tax regime with lower slab rates but most exemptions and deductions withdrawn. It has become the default regime, with the option to choose the old one.

The income-tax rules allowing losses under one head to be set off against income, and unabsorbed losses to be carried forward to future years within limits. Different loss types have different set-off and carry-forward rules.

Income-tax provisions that add certain income of a spouse or minor child to a taxpayer's own income to prevent tax avoidance by shifting income within a family.

The sum of income under all heads in India — salary, house property, business, capital gains and other sources — before Chapter VI-A deductions. Deductions are then subtracted to reach total taxable income.

The Indian requirement to link the Permanent Account Number with the Aadhaar identity number. An unlinked PAN can become inoperative, affecting return filing, refunds and TDS rates.

An Indian income-tax process where assessments are carried out electronically without the taxpayer meeting an officer, aimed at reducing discretion and improving transparency.

A certificate from a taxpayer's home country confirming residency, used to claim benefits under a double-taxation treaty on cross-border income. It is often required to apply a reduced withholding rate.

A presumptive taxation scheme for small goods-transport operators in India, taxing income at a prescribed amount per vehicle per month rather than on actual profit, within a limit on the number of vehicles owned.

Value Added Tax, a consumption tax charged at each stage of supply where businesses collect tax on sales and reclaim tax on purchases, so the net burden falls on the final consumer. Used across the UK, the EU, the Gulf and much of the world; India and Canada run GST variants of the same mechanism.

VAT a business pays on its purchases and expenses, generally recoverable against the VAT it charges on sales provided the purchase relates to taxable supplies and a valid tax invoice is held. Non-business and exempt-related purchases are typically blocked.

VAT a business charges its customers on taxable sales and must account for to the tax authority. The amount payable each period is output VAT less recoverable input VAT; where input exceeds output, a refund position arises.

A mechanism shifting responsibility for accounting for VAT from the supplier to the customer, used for cross-border services and in sectors prone to fraud such as UK construction. The customer records both the output and the input side, so there is often no net cash effect.

HMRCs programme requiring UK businesses to keep digital records and file returns through compatible software using a digital link rather than manual re-entry. Established for VAT, with Income Tax Self Assessment being phased in by income band and start date set by HMRC.

The UK system under which individuals, including the self-employed, company directors and landlords, report income to HMRC on a tax return and pay the tax due. Filing and payment deadlines, and the payments-on-account mechanism, are set by HMRC.

The Business Activity Statement lodged with the Australian Taxation Office to report and pay GST, PAYG withholding, PAYG instalments and other obligations. Lodgement frequency, monthly, quarterly or annual, depends on turnover and registration.

Harmonised Sales Tax, the single tax applied in Canadian provinces that have combined the federal GST with their provincial sales tax into one rate administered by the Canada Revenue Agency. Registrants claim input tax credits in the same way as under GST.

Quebec Sales Tax, levied in addition to the federal GST and administered by Revenu Quebec rather than the Canada Revenue Agency. It works on the same input-credit principle, but registration and filing are separate from the federal system.

Provincial Sales Tax, charged by Canadian provinces that have not harmonised with the federal GST, such as British Columbia, Saskatchewan and Manitoba. Unlike GST and HST it is generally a single-stage retail tax with narrower input recovery.

A periodic return on which a VAT-registered business reports the VAT it charged on sales (output VAT) and the VAT it paid on purchases (input VAT), paying over or reclaiming the difference.

The level of taxable turnover above which a business must register for VAT. The threshold varies by country and is updated periodically, so the current figure should be confirmed for the jurisdiction.

A VAT/GST rule shifting the obligation to account for tax from the supplier to the customer, common on cross-border services and certain domestic supplies. The customer records both the output and input tax on the same transaction.

A simplified UK VAT scheme where a business pays a fixed percentage of its gross turnover as VAT instead of tracking input and output VAT in detail. It trades some accuracy for far simpler accounting.

The tax UK companies pay on their profits, including trading profits, investment income and chargeable gains. Companies must file a return and pay by set deadlines after their accounting period ends.

UK contributions paid by employees, employers and the self-employed that fund state benefits and pensions. Different classes and rates apply depending on employment status and earnings.

The UK system through which individuals with untaxed income — the self-employed, landlords and others — report income and pay tax by filing a return each year, rather than having all tax collected at source.

A UK end-of-year certificate an employer gives each employee showing total pay and the tax and National Insurance deducted during the tax year. It is used to check tax and support claims and returns.

A UK document an employer provides when an employee leaves, detailing pay and tax to the leaving date. The employee gives it to their next employer so that tax continues to be deducted correctly.

Pay As You Earn, the UK system by which employers deduct income tax and National Insurance from employees' wages and pay it to HMRC, reporting in real time each pay period.

A UK requirement for VAT-registered businesses to keep digital records and submit VAT returns through compatible software rather than manually, aimed at reducing errors and modernising tax administration.

Australia's broad-based goods and services tax applied at a single rate to most supplies. Registered businesses report it through a Business Activity Statement and claim credits for GST paid on purchases.

The Australian form businesses lodge to report and pay GST, PAYG withholding, PAYG instalments and other tax obligations in one statement, monthly or quarterly.

A unique identifier for businesses dealing with the Australian Taxation Office and other businesses. It is required to register for GST and appears on invoices to avoid amounts being withheld.

Australia's compulsory retirement savings system, under which employers contribute a set percentage of an employee's earnings to a super fund. The contribution rate is set by law and has been rising in steps.

A Canadian year-end statement an employer issues showing an employee's employment income and the deductions withheld, used to file the individual income-tax return. It is Canada's counterpart to the US W-2.

The return a Canadian business files to report the GST or HST collected on sales and the input tax credits claimed on purchases, remitting or reclaiming the difference.

A unique number the Canada Revenue Agency assigns to a business as a single identifier across its program accounts, such as GST/HST, payroll and corporate income tax.

Output VAT is the tax a business charges on its sales; input VAT is the tax it pays on purchases. A VAT return pays over output VAT less reclaimable input VAT, so only the value added is taxed.

An invoice meeting VAT rules by showing the supplier's VAT number, the rate and amount of VAT, and other prescribed details, so the customer can reclaim input VAT where eligible.

Tax withheld in the source country on cross-border payments such as dividends, interest and royalties. Double taxation treaties often reduce the rate, and relief or credit may be available in the recipient's country.

A treaty between two countries that prevents the same income being taxed twice, by assigning taxing rights and providing credits or exemptions. It is central to cross-border tax planning and compliance.

The rules governing the prices charged between related entities across borders, requiring them to reflect what independent parties would agree (the arm's-length principle), so profit is not shifted artificially to low-tax jurisdictions.

A fixed place of business, or a dependent agent, through which a foreign enterprise carries on business in a country, generally creating a taxable presence there under tax treaties.

A financial technology company that connects applications to bank accounts. HelloBooks uses Plaid to provide live bank feeds from 11,000+ US financial institutions for automatic transaction import and categorization.

Stripe's platform for marketplace and SaaS payments. HelloBooks uses Stripe Connect to enable invoice payment links — customers click "Pay Now" and pay via credit card, with funds going directly to the business's Stripe account.

India's leading payment gateway for online payments. HelloBooks integrates with Razorpay via OAuth to enable UPI, card, net banking, and wallet payments on invoices for Indian businesses.

India's real-time inter-bank payment system that enables instant mobile payments using virtual payment addresses. Processes 10+ billion transactions monthly. Supported in HelloBooks via Razorpay.

An electronic bank-to-bank transfer in the US processed through the Automated Clearing House network, used for payroll, vendor payments and direct debits. It is lower-cost but slower than card or wire payments.

A direct, usually same-day electronic transfer of funds between banks, used for large or time-critical payments. Wires are fast and final but typically cost more than ACH or standard transfers.

National Electronic Funds Transfer, an India-wide system for one-to-one bank transfers settled in batches. It suits routine payments without the instant or high-value focus of IMPS and RTGS.

Real Time Gross Settlement, an Indian system for high-value interbank transfers settled individually and in real time. It is used where large amounts must move immediately and with finality.

Immediate Payment Service, an Indian system for instant interbank fund transfers available around the clock, including on holidays. It bridges the gap between batch NEFT and high-value RTGS.

A feature of India's Unified Payments Interface that lets customers authorise recurring payments — subscriptions, bills, EMIs — to be collected automatically from their account up to an approved limit.

A service that authorises and processes online payments between a customer, the merchant and the banks, securely passing card or account details and returning an approval or decline.

A type of bank account that lets a business accept card and electronic payments, holding funds from sales before they are settled to the business's regular bank account.

A reversal of a card payment initiated by the cardholder's bank, usually after a dispute or fraud claim. The merchant may lose the sale amount and a fee unless the chargeback is successfully contested.

An authorisation under India's National Automated Clearing House system allowing a company to collect recurring payments — loan EMIs, insurance premiums, SIPs — directly from a customer's bank account.

A unique account number issued on top of a single real bank account so that incoming payments can be automatically identified and reconciled to the right customer or invoice.

An account where a neutral third party holds funds until agreed conditions are met, protecting both buyer and seller in a transaction. The money is released only when the terms are satisfied.

A facility allowing a business to withdraw more than its account balance up to an agreed limit, providing short-term working capital. Interest is charged on the amount used.

A short-term borrowing facility in India where a business can draw funds up to a sanctioned limit, typically secured against inventory and receivables, with interest on the amount actually used.

A bank's guarantee to pay a seller on behalf of a buyer once specified documents proving shipment are presented. It reduces risk in international trade where the parties do not know each other.

A prepaid instrument a bank issues on a customer's behalf, guaranteeing payment to the named party. Because the funds are taken upfront, it is more secure than a personal cheque for the payee.

An authorisation a customer gives their bank to make regular fixed payments automatically on set dates, such as rent or loan instalments, without initiating each one.

A payment that fails because the payer's account lacks the funds to cover it. The payee does not receive the money and both parties may incur fees; the transaction must be re-recorded as unpaid.

The gap between when a payment is recorded and when the funds actually clear and become available. Float affects how a business reads its real, usable cash position.

A bank fraud-prevention service that matches cheques presented for payment against a list the company provides, flagging any that do not match before they are honoured.

The predictable revenue a subscription business earns each month. Calculated by multiplying the number of paying customers by the average revenue per user (ARPU). Key SaaS metric.

The annualized version of MRR (MRR x 12). Used by SaaS companies to measure predictable yearly revenue. A key metric for valuation and growth tracking.

The rate at which a company spends cash, typically measured monthly. Gross burn is total monthly spending. Net burn is spending minus revenue. Used to calculate runway (cash / net burn = months of runway).

Current assets minus current liabilities. Measures a business's ability to pay short-term obligations. Positive working capital means the business can cover its near-term debts.

The level of sales at which total revenue equals total costs, so the business makes neither a profit nor a loss. Calculated as fixed costs ÷ (price per unit − variable cost per unit). Knowing your break-even point tells you the minimum you must sell to stay solvent. HelloBooks surfaces break-even analysis from your cost and pricing data.

A financial plan that estimates expected revenue and expenses over a future period, used to set targets and control spending. Comparing actual results to budget (variance analysis) reveals where a business is over- or under-performing. HelloBooks lets you build budgets per department or project and tracks budget-vs-actual automatically.

A business owned and run by one individual with no legal separation between owner and business. It is simple to set up, but the owner is personally liable for all debts and obligations.

A business owned by two or more people who share profits, losses and management under a partnership agreement. Partners are typically personally liable for the firm's obligations unless it is a limited liability partnership.

A business structure combining the flexibility of a partnership with limited liability for its partners, so a partner's personal assets are generally protected from the firm's debts. It is a separate legal entity.

A privately held company whose shareholders have limited liability and whose shares are not offered to the public. It is a separate legal entity, a common structure for growing businesses in India and elsewhere.

Financing used to fund day-to-day operations — inventory, payroll, payables — rather than long-term assets. It bridges timing gaps between paying suppliers and collecting from customers.

A loan repaid over a fixed period in regular instalments, typically used to buy long-term assets or fund expansion. It carries a set interest rate and maturity.

A table showing each payment on a loan split between interest and principal, with the outstanding balance after every instalment. It reveals how slowly principal falls early in a loan.

Raising money by selling ownership stakes in a business rather than borrowing. It brings no repayment obligation but dilutes existing owners and shares future profits.

Raising money by borrowing, to be repaid with interest. It preserves ownership but adds fixed repayment obligations and financial risk if cash flow tightens.

Calculating the sales level at which total revenue equals total costs, so the business neither profits nor loses. It shows how much must be sold to cover fixed and variable costs.

The total amounts a business receives from all sources before subtracting any costs or deductions. Several tax and registration thresholds are measured against gross receipts.

The total sales or revenue a business generates over a period. In accounting it can also refer to how quickly assets such as inventory or receivables are used and replaced.

The total funds a business uses to generate profit, generally equity plus long-term debt, or total assets less current liabilities. It is the base for return on capital employed.

A detailed record of a business's fixed assets — cost, location, purchase date, depreciation and net book value. It supports depreciation accounting, insurance and physical verification.

A part of a business to which costs are allocated but which does not directly generate revenue, such as administration or IT. Tracking costs by center supports budgeting and accountability.

A part of a business that is accountable for both its revenues and its costs, and therefore its profit, such as a product line or branch. It allows performance to be measured unit by unit.

The maximum amount of share capital a company is permitted to issue under its constitution. It sets a ceiling; the company may issue less, which becomes its issued capital.

The amount of share capital that shareholders have actually paid for, as opposed to merely subscribed. It represents the real equity funding the company has received from issuing shares.

The amount received for shares above their nominal or face value. It is recorded in a separate reserve and its use is usually restricted by company law.

The mix of debt and equity a business uses to finance its operations and growth. The balance affects risk, cost of capital and returns to owners.

The formal decision by a company's board or shareholders to distribute part of its profits to shareholders. Once declared, a dividend becomes a liability until it is paid.

A written, signed order by one party directing another to pay a fixed sum to a third on demand or at a set future date. It is a negotiable instrument used to formalise and transfer trade credit.

A written promise by one party to pay a definite sum to another on demand or at a specified date. Unlike a bill of exchange it is made by the payer rather than ordering a third party to pay.