商业与金融术语表

Fractional CFO

A Fractional CFO is a senior financial executive who works part-time across multiple companies, providing CFO-level strategy and leadership at a fraction of the cost of a full-time hire.

Burn Rate

Burn rate is the pace at which a company spends its cash — typically measured monthly — before it becomes cash-flow positive. It is one of the most critical metrics for any startup.

Runway

Runway is the amount of time a company can continue operating at its current burn rate before running out of cash. It is typically expressed in months.

Cap Table

A capitalization table (cap table) is a spreadsheet that tracks who owns what in a company — listing all shareholders, the type and amount of equity they hold, and the percentage of ownership.

Unit Economics

Unit economics describes the direct revenues and costs associated with a single unit of a business — typically one customer — and how that relationship scales.

Financial Modeling

Financial modeling is the process of building a structured, quantitative representation of a company's finances — typically in a spreadsheet — to forecast future performance and support major decisions.

Accrual Accounting

Accrual accounting is a method of recording revenues and expenses when they are earned or incurred — regardless of when cash actually changes hands. It provides a more accurate picture of a business's financial position than cash-basis accounting.

Cash Basis Accounting

Cash basis accounting records revenues when cash is received and expenses when cash is paid — regardless of when the underlying transaction occurred. It is the simpler of the two main accounting methods and is commonly used by small businesses and sole proprietors.

Operating Leverage

Operating leverage measures the proportion of fixed costs in a company's cost structure. High operating leverage means a large share of costs are fixed — so revenue increases translate into disproportionately large profit increases, but revenue declines are equally amplified.

Health Savings Account (HSA)

A Health Savings Account (HSA) is a tax-advantaged savings account available to individuals enrolled in a High-Deductible Health Plan (HDHP). Contributions are tax-deductible, growth is tax-free, and qualified withdrawals for medical expenses are also tax-free — making it a uniquely powerful triple-tax-advantaged vehicle.

EBITDA

EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. It is a widely used measure of a company's core operating profitability, stripping out the effects of financing decisions, tax environments, and non-cash accounting charges.

Working Capital

Working capital is the difference between a company's current assets (cash, receivables, inventory) and its current liabilities (payables, short-term debt). It measures whether a business has enough short-term assets to cover its short-term obligations and fund day-to-day operations.

Accounts Receivable (AR)

Accounts receivable (AR) is money owed to a business by its customers for products delivered or services rendered but not yet paid for. It appears as a current asset on the balance sheet and represents the business's legal right to collect payment.

Accounts Payable (AP)

Accounts payable (AP) is money a business owes to its vendors and suppliers for goods or services received but not yet paid for. It appears as a current liability on the balance sheet and represents the business's short-term payment obligations.

Depreciation

Depreciation is the accounting process of allocating the cost of a tangible asset (equipment, vehicles, buildings) over its useful life. Rather than expensing the full cost in the year of purchase, depreciation spreads the expense across multiple years, matching costs with the revenue the asset helps generate.

Amortization

Amortization is the gradual reduction of a debt over time through regular payments, or the accounting process of expensing intangible assets (patents, trademarks, goodwill) over their useful life. The term applies to both loan repayment and asset accounting.

GAAP (Generally Accepted Accounting Principles)

GAAP (Generally Accepted Accounting Principles) is the standard framework of accounting rules used for financial reporting in the United States. Publicly traded companies are required to report under GAAP; many private companies must as well when seeking investment, bank financing, or preparing for acquisition.

Balance Sheet

A balance sheet is a financial statement showing a company's assets, liabilities, and equity at a specific point in time. It follows the accounting equation: Assets = Liabilities + Equity. It is one of the three core financial statements, alongside the income statement and cash flow statement.

Income Statement (P&L)

An income statement (also called a profit and loss statement or P&L) shows a company's revenues, expenses, and net profit or loss over a specific period. It is the primary tool for assessing business profitability and one of the three core financial statements.

Cash Flow Statement

A cash flow statement shows how cash moves in and out of a business over a specific period, divided into operating, investing, and financing activities. Unlike the income statement, it shows actual cash movement — not accrual-based accounting entries — making it the definitive measure of a business's liquidity.

Gross Margin

Gross margin is revenue minus cost of goods sold (COGS), expressed as a percentage of revenue. It measures how much of each dollar of revenue is retained after direct production or delivery costs — before operating expenses like sales, marketing, and R&D. High gross margins signal pricing power and scalable economics.

Net Margin

Net margin (also net profit margin) is net income divided by revenue, expressed as a percentage. It represents the percentage of each revenue dollar that becomes profit after all expenses — COGS, operating expenses, interest, and taxes. It is the bottom-line measure of a company's profitability.

Weighted Average Cost of Capital (WACC)

WACC is the average rate a company must earn on its investments to satisfy all its capital providers — debt holders and equity holders — weighted by their proportion in the capital structure. It is the discount rate used in DCF (discounted cash flow) valuations and represents the minimum return a company must generate to create value.

Hurdle Rate

A hurdle rate is the minimum acceptable rate of return on an investment before a company or investor will proceed. It represents the opportunity cost of capital — if an investment cannot beat the hurdle rate, capital is better deployed elsewhere. In private equity and venture capital, the hurdle rate is the preferred return threshold LPs must receive before the GP earns carried interest.

Internal Rate of Return (IRR)

IRR is the discount rate that makes the net present value (NPV) of all cash flows from an investment equal to zero — in other words, the annualized return rate the investment is expected to generate. A project is worth pursuing if its IRR exceeds the hurdle rate or cost of capital.

Debt Service Coverage Ratio (DSCR)

DSCR measures a property's or business's ability to cover its debt payments from operating income. DSCR = Net Operating Income ÷ Total Debt Service. A DSCR above 1.0 means income exceeds debt payments; below 1.0 means income is insufficient to cover debt. Lenders typically require DSCR of 1.20–1.25x or higher for commercial real estate loans.

Loan-to-Value Ratio (LTV)

Loan-to-value (LTV) is the ratio of a loan amount to the appraised value of the asset securing it. LTV = Loan Amount ÷ Property Value × 100. Lenders use LTV to assess risk: the lower the LTV, the more equity the borrower has and the lower the lender's risk. Most commercial real estate lenders cap LTV at 65–80%; residential at 80–97%.

DBA (Doing Business As)

A DBA (Doing Business As), also called a trade name or fictitious business name, allows a business to legally operate under a name different from its registered legal entity name. Sole proprietors, partnerships, and LLCs commonly file DBAs to create distinct brand identities without forming a separate legal entity.

Dividend

A dividend is a distribution of a company's earnings to its shareholders, paid in cash or additional stock, typically on a quarterly basis as determined by the board of directors.

Cost Basis

Cost basis is the original value of an asset for tax purposes — typically the purchase price plus adjustments — used to calculate capital gains or losses when the asset is sold.

Business Valuation

A business valuation is a formal process of determining the economic value of a company or business unit, used for transactions, tax filings, litigation, estate planning, and strategic decision-making.

Tax Planning

Tax planning is the process of structuring your finances and decisions throughout the year to legally minimize your tax liability — as distinct from tax preparation, which files what has already happened.

83(b) Election

An 83(b) election is a tax filing that allows founders and early employees to pay taxes on equity at its current (low) value rather than when it vests — potentially saving significant taxes as the company grows.

S-Corp Election

An S-Corp election is a tax designation that allows a business to pass income directly to shareholders and avoid double taxation — while also providing potential savings on self-employment taxes.

FBAR

FBAR (Foreign Bank Account Report) is a mandatory annual filing required of US persons who have financial interest in, or signature authority over, foreign bank accounts with an aggregate balance exceeding $10,000 at any point during the year.

Controlled Foreign Corporation (CFC)

A Controlled Foreign Corporation (CFC) is a foreign company in which US persons own more than 50% of the voting power or value — triggering complex US tax reporting obligations for the US shareholders.

Wash Sale Rule

The wash sale rule is an IRS regulation that disallows a tax deduction on a security sold at a loss if the taxpayer purchases the same or 'substantially identical' security within 30 days before or after the sale. It prevents investors from harvesting tax losses while maintaining their economic position.

Capital Loss

A capital loss occurs when you sell a capital asset (stock, real estate, crypto, business interest) for less than your cost basis — what you originally paid plus any improvements. Capital losses can offset capital gains dollar-for-dollar and, if losses exceed gains, up to $3,000 of ordinary income per year.

Tax Credit

A tax credit is a direct, dollar-for-dollar reduction of your tax bill. Unlike a tax deduction (which reduces taxable income and saves taxes at your marginal rate), a $1,000 tax credit reduces taxes owed by exactly $1,000 — making credits significantly more valuable than equivalent deductions.

Qualified Business Income (QBI) Deduction

The QBI deduction (Section 199A) allows eligible self-employed individuals and pass-through business owners to deduct up to 20% of qualified business income from federal taxable income. It is one of the most significant tax benefits for small business owners, established by the 2017 Tax Cuts and Jobs Act.

IRS Notice

An IRS notice is official written communication from the IRS about your tax account — informing you of a balance due, audit, proposed adjustment, request for information, or other action. Each notice has a specific CP or LT number that identifies its type and the required response. Ignoring IRS notices escalates enforcement action.

Audit Representation

Audit representation (also called taxpayer representation) is the service of having a qualified professional — CPA, enrolled agent, or tax attorney — represent you before the IRS or state tax authority during an examination. A representative handles all communications, prepares responses, and negotiates on your behalf — you typically do not need to meet with the IRS directly.

Federal Tax Lien

A federal tax lien is the government's legal claim against all your property — real estate, financial accounts, and personal property — when you neglect or refuse to pay a tax debt after notice and demand. A lien attaches to all current and future assets and can severely damage credit, complicate real estate transactions, and block access to financing.

Innocent Spouse Relief

Innocent spouse relief is an IRS provision that allows a spouse (or former spouse) to be relieved of joint tax liability for errors, underreported income, or fraudulent activity that was solely attributable to the other spouse on a jointly filed return. It protects spouses who did not know — and had no reason to know — about the tax problem.

Offer in Compromise (OIC)

An Offer in Compromise is an agreement between a taxpayer and the IRS that settles a tax liability for less than the full amount owed. The IRS accepts OICs when there is doubt as to collectibility, doubt as to liability, or when paying in full would create economic hardship. Despite frequent advertising, OICs are difficult to qualify for — the IRS accepts roughly 30–40% of applications.

Tax Credit vs. Tax Deduction

A tax credit directly reduces your tax bill dollar-for-dollar, while a tax deduction reduces your taxable income — making credits generally far more valuable than deductions of the same amount.

Estimated Tax

Estimated taxes are quarterly tax payments made by self-employed individuals, freelancers, and businesses to cover income tax, self-employment tax, and other taxes that aren't withheld by an employer.

Self-Employment Tax

Self-employment tax is a 15.3% tax on net self-employment income that covers Social Security (12.4%) and Medicare (2.9%) contributions — the combined employer and employee portions that would normally be split with an employer.

SAFE Agreement

A SAFE (Simple Agreement for Future Equity) is a common early-stage fundraising instrument that gives an investor the right to receive equity in a future priced round, in exchange for money invested today.

Convertible Note

A convertible note is a short-term debt instrument that converts into equity — usually at the next priced funding round — rather than being repaid in cash. It is a common early-stage fundraising tool.

Term Sheet

A term sheet is a non-binding document that outlines the key terms and conditions of a proposed investment — setting the framework for the final legal agreements in a funding round.

Vesting Schedule

A vesting schedule defines the timeline over which a founder, employee, or advisor earns ownership of their equity — typically tied to continued service at the company.

Equity Compensation

Equity compensation is a non-cash payment to employees or contractors that grants ownership in the company — typically in the form of stock options, restricted stock units (RSUs), or direct stock grants. It aligns employee incentives with company value creation.

409A Valuation

A 409A valuation is an independent appraisal of the fair market value (FMV) of a private company's common stock. It is required by the IRS before a company can issue stock options, establishing the exercise price to avoid significant tax penalties.

Angel Investor

An angel investor is a high-net-worth individual who provides early-stage capital to startups — typically between $25K and $500K — in exchange for equity, usually before institutional venture capital is available.

Series A Funding

Series A is typically a startup's first institutional venture capital round, raising $5M–$20M in exchange for preferred stock, usually after the company has demonstrated product-market fit and meaningful traction.

Pre-Seed Funding

The earliest stage of external funding for a startup, typically raised before a product is fully built or significant traction is established — used to fund initial development, market validation, and team formation.

Series B

The third major institutional funding round for a startup (after seed and Series A), typically raised to aggressively scale a business model that has already demonstrated clear product-market fit and repeatable revenue growth.

Bridge Financing

Short-term capital raised to 'bridge' a company to its next major funding event or milestone — typically structured as convertible debt or a SAFE when a company needs cash before closing a larger round.

Liquidation Preference

A contractual right that gives preferred stockholders (investors) priority over common stockholders (founders, employees) to receive proceeds in a liquidation event such as an acquisition or wind-down.

Pro-Rata Rights

A contractual right giving existing investors the ability to participate in future funding rounds proportional to their current ownership, allowing them to maintain their ownership percentage as the company raises more capital.

Trademark

A trademark is a legally protected brand identifier — typically a name, logo, slogan, or combination — that distinguishes your goods or services from competitors in the marketplace.

Provisional Patent Application

A provisional patent application is a lower-cost filing that establishes a 'patent pending' status for 12 months, giving inventors time to develop and test their invention before committing to a full patent application.

Trade Secret

A trade secret is confidential business information — formulas, processes, designs, customer lists, or algorithms — that provides a competitive advantage and is protected as long as it remains secret.

IP Assignment Agreement

An IP assignment agreement is a legal document that transfers ownership of intellectual property — code, inventions, designs, or creative works — from the creator to the company.

LLC (Limited Liability Company)

An LLC (Limited Liability Company) is a business structure that provides its owners (called members) with personal liability protection — meaning your personal assets are generally protected from business debts and lawsuits — while offering flexible taxation options.

Sole Proprietorship

A sole proprietorship is the simplest business structure — a business owned and operated by one person with no legal distinction between the owner and the business. It requires no formal registration, but the owner has unlimited personal liability for all business debts and legal claims.

Fiduciary

A fiduciary is a person or organization legally and ethically obligated to act in another party's best interest. Financial advisors, attorneys, trustees, and corporate directors are common examples of fiduciaries — they must prioritize their client's interests above their own.

Power of Attorney (POA)

A Power of Attorney (POA) is a legal document that authorizes one person (the agent) to act on behalf of another person (the principal) in legal, financial, or medical matters. The scope and duration depend on the type of POA and how it is drafted.

Contingency Fee

A contingency fee is a legal fee arrangement in which an attorney is paid only if the case is won or settled — typically a percentage (25–40%) of the recovered amount. If the case is lost, the client generally owes no attorney fees.

Retainer Fee

A retainer fee is an upfront payment made to a professional — most commonly an attorney or consultant — to secure their availability and future services. The retainer is typically held in a trust account and drawn against as work is performed.

Deposition

A deposition is a formal, out-of-court sworn testimony given by a witness or party during the discovery phase of litigation. The testimony is recorded and can be used at trial. Depositions allow attorneys to gather information, assess witness credibility, and lock in testimony before trial.

Tort

A tort is a civil wrong — an act or omission that causes harm to another person, giving the injured party the right to sue for damages. Torts are distinct from criminal offenses (prosecuted by the government) and from contract breaches (which require a pre-existing agreement).

Negligence

Negligence is a legal concept describing the failure to exercise reasonable care, resulting in harm to another person. It is the most common basis for civil lawsuits, including personal injury, medical malpractice, and professional liability claims.

Arbitration

Arbitration is a private dispute resolution process in which parties present their case to one or more neutral arbitrators who issue a binding (or sometimes non-binding) decision. It is an alternative to litigation that is typically faster, private, and less expensive than going to court.

Mediation

Mediation is a voluntary dispute resolution process in which a neutral third party (the mediator) helps disputing parties reach a mutually acceptable settlement. Unlike arbitration, the mediator has no authority to impose a decision — their role is to facilitate negotiation.

Subpoena

A subpoena is a formal legal document that compels a person to testify (subpoena ad testificandum) or produce documents and evidence (subpoena duces tecum) in a legal proceeding. Ignoring a subpoena can result in contempt of court.

Fair Use

Fair use is a legal doctrine in US copyright law that allows limited use of copyrighted material without permission — for purposes such as commentary, criticism, education, news reporting, and parody. Whether a use qualifies as fair use depends on a four-factor balancing test applied case by case.

Trade Dress

Trade dress refers to the overall visual appearance and image of a product or business — including packaging design, color scheme, shape, or décor — that identifies its source and distinguishes it from competitors. Trade dress can be protected under trademark law without federal registration if it is distinctive and non-functional.

Intellectual Property (IP)

Intellectual property (IP) refers to creations of the mind — inventions, creative works, brand identifiers, and trade secrets — protected by law. The four primary categories of IP protection in the US are patents, trademarks, copyrights, and trade secrets, each covering different types of assets with different rules and durations.

Statute of Limitations

A statute of limitations is a law that sets the maximum time after an event within which legal proceedings may be initiated. Once the deadline passes, a claim is time-barred regardless of its merits. Statutes of limitations vary by jurisdiction and type of claim.

Breach of Contract

A breach of contract occurs when one party to a valid agreement fails to fulfill their contractual obligations without a legally valid excuse. The non-breaching party may seek damages, specific performance, or contract rescission depending on the type and severity of the breach.

Class Action Lawsuit

A class action is a lawsuit in which a group of people with substantially similar legal claims sues a defendant collectively. One or more named plaintiffs represent the entire class. Class actions are common in consumer fraud, securities fraud, employment discrimination, and product liability cases where individual damages are too small to justify individual lawsuits.

Force Majeure

Force majeure is a contract clause that excuses a party from performance obligations when extraordinary events beyond their control — war, natural disasters, pandemics, government actions — make performance impossible or impractical. Whether a force majeure clause applies depends heavily on exact contract language and jurisdiction.

Indemnification

Indemnification is a contractual obligation by one party (the indemnitor) to compensate another (the indemnitee) for specified losses, damages, or liabilities. Indemnification clauses are ubiquitous in commercial contracts and determine who bears the financial risk if something goes wrong.

Liquidated Damages

Liquidated damages are a pre-agreed sum specified in a contract that one party pays to the other if a specific breach occurs — typically delay or non-performance. Courts enforce liquidated damages clauses when the pre-agreed amount is a reasonable estimate of actual harm at the time of contracting, not a penalty.

Whistleblower Protection

Whistleblower protection laws shield employees who report illegal activity, fraud, safety violations, or regulatory non-compliance from retaliation by their employer. Federal protections include the False Claims Act (government contractor fraud), Dodd-Frank Act (SEC/CFTC violations), and Sarbanes-Oxley Act (public company accounting fraud), among dozens of statutes.

Fiduciary Duty

A fiduciary duty is the highest standard of care recognized in law — an obligation to act in the best interests of another party, not oneself. Fiduciary relationships arise in specific contexts: attorney-client, trustee-beneficiary, corporate director-shareholder, financial advisor-client, and others. Breach of fiduciary duty can result in personal liability.

Independent Contractor

An independent contractor is a self-employed individual or entity hired to perform specific work for a client without becoming an employee. The distinction matters enormously: employees receive benefits and payroll taxes; contractors do not. Misclassifying employees as contractors is one of the most common and costly labor law violations.

Letter of Intent (LOI)

A letter of intent (LOI) is a document outlining the preliminary terms of a proposed transaction — typically a business acquisition, commercial lease, or partnership — before a formal binding agreement is signed. Most LOI provisions are non-binding, but certain provisions (exclusivity, confidentiality, expense allocation) are typically binding.

Promissory Note

A promissory note is a written, legally binding promise by one party (the maker) to pay a specific sum to another party (the payee) at a specified time or on demand. It is the basic legal instrument underlying most loans — from personal loans between individuals to commercial bank financing and convertible debt in startup fundraising.

NDA (Non-Disclosure Agreement)

An NDA (Non-Disclosure Agreement), also called a confidentiality agreement, is a legally binding contract requiring parties to keep specified confidential information secret and not disclose it to third parties. NDAs are foundational documents in business dealings — covering hiring, vendor relationships, M&A due diligence, partnerships, and fundraising.

Writ

A writ is a formal written order issued by a court or other legal authority, commanding a person or entity to perform or refrain from performing a specific act.

Lien

A lien is a legal claim or hold on property — real estate, vehicles, or other assets — that serves as security for a debt or obligation, preventing the owner from selling or transferring the property free and clear until the lien is satisfied.

Probate

Probate is the legal process through which a deceased person's will is validated by a court, their debts are settled, and remaining assets are distributed to heirs or beneficiaries.

O-1 Visa

The O-1 visa is a US nonimmigrant visa for individuals who possess extraordinary ability in their field — defined as the top of their occupation — in science, arts, education, business, or athletics.

H-1B Visa

The H-1B is a US nonimmigrant work visa for specialty occupation workers — typically requiring at least a bachelor's degree in a relevant field — sponsored by a US employer.

F-1 Visa

The F-1 visa is the most common US student visa, allowing foreign nationals to pursue full-time academic study at a USCIS-approved institution. F-1 students may work on campus and, after completing a degree, qualify for Optional Practical Training (OPT) to work in the US for up to 3 years in STEM fields.

Green Card (Permanent Resident Card)

A green card (officially the Permanent Resident Card) grants foreign nationals lawful permanent residence in the United States — the right to live and work permanently without requiring a separate visa. Green card holders can apply for US citizenship after 3–5 years of residency.

Naturalization

Naturalization is the legal process by which a foreign national becomes a US citizen. To qualify, applicants must generally have been a lawful permanent resident for 3–5 years, meet continuous residence and physical presence requirements, demonstrate good moral character, pass an English and civics test, and take an oath of allegiance.

EB-1 Visa (Employment-Based First Preference)

The EB-1 visa is the highest-priority employment-based green card category, available to aliens of extraordinary ability (EB-1A), outstanding professors and researchers (EB-1B), and multinational managers and executives (EB-1C). EB-1 applicants generally do not require PERM labor certification, making it faster than most employment-based green card categories.

I-9 Verification

The federal employment eligibility verification process that every U.S. employer must complete for each new hire, confirming the employee's identity and legal authorization to work.

Adjustment of Status

The process that allows certain foreign nationals already inside the United States to apply for lawful permanent residence (a green card) without leaving the country.

Consular Processing

The pathway to U.S. permanent residence for foreign nationals outside the United States, completed through an interview at a U.S. embassy or consulate in their home country.

Priority Date

The date that determines a foreign national's place in line for an immigrant visa number — essentially a timestamp that governs when they can move forward with a green card application.

Visa Sponsorship

The process by which a U.S. employer formally petitions for a foreign national's work authorization or immigrant visa, accepting legal and financial responsibility for the worker's status.

PERM Labor Certification

A mandatory U.S. Department of Labor process that employers must complete before sponsoring most foreign workers for employment-based green cards, proving no qualified American workers are available for the role.

EAD (Employment Authorization Document)

A government-issued card that grants foreign nationals who are not permanent residents the legal right to work for any employer in the United States for a specified period.

Asylum

A form of legal protection available to individuals already in the United States who cannot return to their home country due to persecution or a well-founded fear of persecution based on race, religion, nationality, political opinion, or membership in a particular social group.

TN Visa

A nonimmigrant work visa available exclusively to Canadian and Mexican citizens under the USMCA (formerly NAFTA), allowing them to work in the U.S. in specific professional occupations without going through the H-1B lottery.

I-140 (Immigrant Petition for Alien Workers)

The core USCIS petition that formally establishes a foreign worker's eligibility for an employment-based green card — a critical filing that sets the priority date and anchors the entire permanent residence process.

At-Will Employment

At-will employment is a legal doctrine in the US (adopted in most states) that allows either the employer or the employee to end the employment relationship at any time, for any reason — or no reason — without legal liability.

Non-Compete Agreement

A non-compete agreement restricts an employee or contractor from working for competitors or starting a competing business for a specified period after leaving a company.

ESOP (Employee Stock Ownership Plan)

An ESOP is a qualified employee benefit plan that gives workers ownership interest in the company, typically through shares allocated over time based on tenure and compensation.

Performance Improvement Plan (PIP)

A Performance Improvement Plan (PIP) is a formal HR document that outlines specific performance deficiencies, sets clear expectations and measurable goals, defines a timeframe for improvement, and specifies consequences if targets are not met. PIPs serve both as a performance management tool and as documentation in potential termination proceedings.

Wrongful Termination

Wrongful termination occurs when an employee is fired for an illegal reason — such as discrimination based on a protected characteristic, retaliation for reporting violations, or breach of an employment contract. Despite the US at-will employment default, employees have significant legal protections against certain types of terminations.

Severance Agreement

A severance agreement is a contract between an employer and a departing employee that provides compensation and benefits in exchange for the employee's agreement to certain terms, typically including a release of legal claims against the employer.

FMLA (Family and Medical Leave Act)

A federal law that entitles eligible employees of covered employers to take up to 12 weeks of unpaid, job-protected leave per year for qualifying family or medical reasons.

COBRA

A federal law that allows employees and their dependents to continue employer-sponsored group health insurance for a limited period after losing coverage due to certain qualifying events.

W-2 vs 1099

The classification distinction between employees (who receive W-2 forms) and independent contractors (who receive 1099 forms), with significant legal, tax, and benefit implications for both workers and businesses.

Employee Handbook

A written document that communicates a company's policies, expectations, procedures, and legal obligations to employees, serving as a foundational reference for the employment relationship.

PTO (Paid Time Off)

A benefit policy that provides employees with a bank of paid leave days they can use for vacation, illness, personal needs, or other time away from work.

Exempt vs Non-Exempt Employees

A classification under the Fair Labor Standards Act that determines whether an employee is entitled to minimum wage and overtime pay, based on their salary level and job duties.

Workers' Compensation

A state-mandated insurance program that provides wage replacement and medical benefits to employees injured in the course of employment, in exchange for relinquishing the right to sue the employer.

Background Check

A pre-employment screening process that verifies a candidate's identity, criminal history, employment history, education credentials, and other relevant records before hiring.

Offer Letter

A formal written communication from an employer to a selected candidate outlining the terms of a job offer, including position, compensation, start date, and key conditions of employment.

Onboarding

The structured process of integrating a new employee into an organization — completing required paperwork, providing role-specific training, and acclimating them to company culture and expectations.

Employment Contract

A legally binding agreement between an employer and employee that specifies the terms, rights, and obligations of the employment relationship, including compensation, duration, duties, and termination conditions.

Job Description

A written document that defines a position's title, responsibilities, required qualifications, reporting structure, and employment classification, used for recruiting, performance management, and legal compliance.

Go-to-Market Strategy

A go-to-market (GTM) strategy is the plan a company uses to bring a product or service to market — defining the target customer, value proposition, pricing, distribution channels, and sales motion.

Customer Acquisition Cost (CAC)

Customer Acquisition Cost (CAC) is the total cost of acquiring one new customer — including all sales and marketing expenses divided by the number of new customers acquired in a given period.

Customer Lifetime Value (LTV)

Customer Lifetime Value (LTV) is the total revenue a business can expect from a single customer over the entire duration of their relationship — a fundamental input into unit economics and acquisition strategy.

Due Diligence

Due diligence is the process of thoroughly investigating a person, company, or asset before entering into a significant transaction or agreement. It is most commonly associated with mergers and acquisitions, investments, and real estate transactions.

MRR (Monthly Recurring Revenue)

MRR (Monthly Recurring Revenue) is the predictable, recurring revenue a subscription business expects to receive every month. It is one of the most important metrics for SaaS and subscription companies, forming the foundation of revenue forecasting, valuation, and growth analysis.

Churn Rate

Churn rate is the percentage of customers or revenue lost during a given period. For subscription businesses, it is the single most important driver of long-term growth — a high churn rate destroys the compounding value that makes subscription economics work.

Net Promoter Score (NPS)

Net Promoter Score (NPS) is a customer loyalty metric based on a single question: 'How likely are you to recommend us to a friend or colleague?' on a 0–10 scale. Respondents are classified as Promoters (9–10), Passives (7–8), or Detractors (0–6). NPS = % Promoters − % Detractors.

ARR (Annual Recurring Revenue)

ARR (Annual Recurring Revenue) is the annualized value of a subscription business's recurring revenue — typically MRR × 12. It is the standard top-line metric for SaaS companies and the primary driver of valuation in subscription business fundraising and M&A transactions.

Product-Market Fit

Product-market fit (PMF) is the degree to which a product satisfies strong market demand. A company has PMF when its product meets a genuine need so well that customers return, refer others, and would be significantly disappointed if it disappeared. It is widely considered the most critical milestone for early-stage companies.

Franchise

A franchise is a business model where a franchisor licenses its brand, systems, and operational methods to a franchisee who operates an independently owned location in exchange for upfront fees and ongoing royalties.

Joint Venture

A joint venture (JV) is a business arrangement where two or more parties agree to pool resources for a specific project or business activity while maintaining their separate legal identities.

SWOT Analysis

A structured strategic planning framework that identifies a business's internal Strengths and Weaknesses alongside external Opportunities and Threats to inform decision-making and strategy.

KPI (Key Performance Indicator)

A quantifiable metric that measures how effectively a company or team is achieving its most critical business objectives — the handful of numbers that determine whether strategy is actually working.

Pivoting

A deliberate, structured change in a startup's or business's core strategy — whether its product, market, revenue model, or technology — in response to evidence that the current approach is not working.

Competitive Moat

A sustainable structural advantage that protects a business from competition, allowing it to maintain above-average returns over a long period — the business equivalent of a castle's defensive moat.

Exit Strategy

A planned approach for a business owner or investor to liquidate or transfer their ownership stake in a company, typically through a sale, merger, IPO, or succession plan.

Cap Rate (Capitalization Rate)

Cap rate (capitalization rate) is a real estate metric that measures a property's annual net operating income as a percentage of its purchase price. It is one of the most widely used tools for comparing investment properties and estimating potential returns.

1031 Exchange

A 1031 exchange (named after IRS Code Section 1031) allows real estate investors to defer capital gains taxes when selling an investment property by reinvesting the proceeds into a like-kind replacement property. Properly executed, it can defer taxes indefinitely.

Escrow

Escrow is a financial arrangement where a neutral third party holds funds, documents, or assets on behalf of two transacting parties until predefined conditions are met, most commonly used in real estate closings.

Title Insurance

A one-time insurance policy that protects buyers and lenders against financial losses arising from defects or disputes in a property's title history.

Earnest Money

A good-faith deposit made by a buyer when submitting a purchase offer, demonstrating serious intent to complete the transaction.

Closing Costs

The fees and expenses paid at the finalization of a real estate transaction, typically totaling 2–5% of the loan amount for buyers and 6–10% of the sale price for sellers.

Home Appraisal

A licensed appraiser's professional opinion of a property's market value, required by lenders to ensure the loan amount does not exceed the property's worth.

Deed of Trust

A legal document used in many states instead of a mortgage, transferring bare legal title to a neutral trustee as security for a home loan until it is paid off.

HOA (Homeowners Association)

A governing organization in planned communities or condominiums that enforces rules, maintains common areas, and collects dues from property owners.

PITI

An acronym for Principal, Interest, Taxes, and Insurance — the four components that make up a homeowner's total monthly mortgage payment.

Short Sale

A real estate transaction where a lender agrees to accept less than the full mortgage balance owed as full settlement, allowing a financially distressed homeowner to sell rather than face foreclosure.

Foreclosure

The legal process by which a lender repossesses and sells a property after the borrower fails to make mortgage payments, satisfying the outstanding debt.

MLS (Multiple Listing Service)

A private database maintained by real estate brokers that aggregates property listings, enabling cooperative selling and providing the most comprehensive and accurate source of for-sale homes.

Cash-on-Cash Return

An investment metric that measures annual pre-tax cash flow relative to the total cash invested, expressing the yield on out-of-pocket capital in a real estate deal.

House Hacking

A real estate strategy in which an owner-occupant rents out part of their primary residence — such as additional units, spare bedrooms, or an ADU — to offset or eliminate their housing costs.

SEO (Search Engine Optimization)

SEO is the practice of improving a website's visibility in unpaid (organic) search engine results through content, technical, and authority-building strategies — making it easier for potential customers to find you.

Content Marketing

Content marketing is the strategic creation and distribution of valuable, relevant content — articles, videos, guides, podcasts — to attract and retain a defined audience and ultimately drive profitable customer action.

Conversion Rate

Conversion rate is the percentage of visitors or leads who complete a desired action — purchasing, signing up, or booking a call — and is the foundational metric for measuring how efficiently you turn traffic into revenue.

CPM (Cost Per Mille)

CPM is the cost an advertiser pays per 1,000 ad impressions — the standard pricing model for brand awareness campaigns where reach and visibility are the primary goal, not direct clicks or conversions.

CPC (Cost Per Click)

CPC is the amount an advertiser pays each time a user clicks on their ad — the standard pricing model for search and performance advertising where driving traffic or direct response is the goal.

Brand Identity

Brand identity is the collection of visual and verbal elements — logo, colors, typography, tone of voice, and messaging — that a company deliberately designs to represent how it wants to be perceived in the market.

Marketing Funnel

The marketing funnel is a model that maps the stages a potential customer moves through — from first awareness of your brand to making a purchase — and guides how marketing and sales activities should be structured at each stage.

Email Marketing

Email marketing is the use of targeted email campaigns to nurture leads, retain customers, and drive revenue — consistently delivering one of the highest returns on investment of any marketing channel.

Influencer Marketing

Influencer marketing is the practice of partnering with individuals who have an established, engaged audience — on social media, YouTube, podcasts, or other platforms — to promote your product or service to their followers.

Paid Media

Paid media is any marketing channel where you pay to distribute your message or reach an audience — including search ads, social media ads, display advertising, sponsored content, and out-of-home placements.

Organic Traffic

Organic traffic is the visitors who arrive at your website through unpaid channels — primarily search engines — as opposed to paid advertising, and it represents one of the most valuable and durable sources of customer acquisition.

Brand Equity

Brand equity is the commercial value a company derives from having a well-known, trusted name — the premium customers are willing to pay, the loyalty they show, and the advantage that comes from recognition in a crowded market.

Market Segmentation

Market segmentation is the process of dividing a broad target market into distinct subgroups of customers who share common characteristics — enabling more precise targeting, messaging, and product development.

Marketing ROI

Marketing ROI measures the revenue return generated by marketing investments relative to their cost — the fundamental metric for evaluating whether marketing spend is creating value or destroying it.

Social Proof

Social proof is the psychological phenomenon where people look to the behavior and opinions of others to guide their own decisions — and in marketing, it's the deliberate use of testimonials, reviews, case studies, and endorsements to reduce buyer uncertainty.

MVP (Minimum Viable Product)

An MVP is the simplest version of a product that delivers enough value for early users to adopt it and provide feedback — allowing a team to validate core assumptions with real customers before committing to full-scale development.

API (Application Programming Interface)

An API is a defined interface that allows different software systems to communicate and exchange data with each other — the plumbing that lets apps, platforms, and services connect and share functionality.

SaaS (Software as a Service)

SaaS is a software delivery model where applications are hosted in the cloud and accessed via a browser or app on a subscription basis — eliminating the need for users to install, maintain, or host the software themselves.

Technical Debt

Technical debt is the accumulated cost of shortcuts, suboptimal decisions, and deferred improvements in a software codebase — representing future work that must eventually be done to keep the system maintainable and scalable.

Agile

Agile is an iterative approach to software development — and increasingly to project management broadly — that prioritizes short development cycles, continuous feedback, and adaptive planning over rigid upfront specification.

DevOps

DevOps is a set of practices and cultural principles that combine software development (Dev) and IT operations (Ops) — enabling teams to build, test, and release software faster, more reliably, and with greater confidence.

Cloud Computing

Cloud computing is the delivery of computing services — servers, storage, databases, networking, software, and analytics — over the internet from shared infrastructure operated by providers like AWS, Google Cloud, and Microsoft Azure.

Cybersecurity

Cybersecurity is the practice of protecting computer systems, networks, and data from unauthorized access, damage, and attacks — an increasingly critical function for every organization that operates digitally.

Data Privacy (GDPR/CCPA)

Data privacy law governs how organizations collect, store, use, and share personal information — with GDPR (Europe) and CCPA (California) setting the most influential global standards that any business handling personal data must understand.

Software Development Contract

A software development contract is the legal agreement between a client and a developer or agency that defines project scope, deliverables, timelines, payment, intellectual property ownership, and warranties — the document that protects both parties when building software.

White Label Software

White label software is a product built by one company and rebranded and resold by another under its own name — allowing businesses to offer software capabilities to their customers without the cost or time of building the technology themselves.

Open Source License

An open source license is the legal instrument that governs how open source software can be used, modified, and distributed — and understanding which licenses your codebase contains is a critical compliance and IP obligation for any software business.

Digital Transformation

Digital transformation is the process of integrating digital technology across all areas of a business — fundamentally changing how it operates and delivers value — rather than simply digitizing existing analog processes.

Data Breach

A data breach is a security incident in which unauthorized parties gain access to sensitive, protected, or confidential information — triggering legal notification obligations, regulatory investigations, and significant financial and reputational damage.

IP in Tech (Work-for-Hire & Assignment)

In technology, IP ownership determines who legally owns code, designs, algorithms, and inventions created during development — and without explicit written assignment, the developer often owns the IP by default, not the client who paid for it.