Resource center · Glossary
The terms behind the work, in plain language.
100 definitions from the industries we serve and the technology we build, each with an example and links to related ideas.
Tax practice
- Engagement letterA signed agreement that defines the services a firm will provide, the responsibilities of each party, fees, and the limits of the engagement.
- Estimated tax paymentsPeriodic payments of income tax during the year by taxpayers whose income is not fully covered by withholding, such as business owners.
- Extension to fileAn automatic additional period to file a tax return, which extends the filing deadline but not the deadline to pay tax owed.
- FTC Safeguards RuleA federal rule requiring financial institutions, including tax preparers, to maintain an information security program that protects customer data.
- Information returns (Form 1099)Forms businesses file to report certain payments, such as nonemployee compensation, interest, and rents, to the IRS and to the recipient.
- Preparer–reviewer separationThe practice of having someone other than the preparer review and approve work before it is released, with a record of what was reviewed.
- PTIN and EFINThe IRS identifiers a paid preparer needs to prepare returns for compensation (PTIN) and for a firm to e-file them as an authorized provider (EFIN).
- Sales tax nexusThe connection between a business and a state that obliges the business to collect and remit that state's sales tax.
- Section 7216 consentTaxpayer consent required before a tax return preparer uses or discloses tax return information for purposes outside preparing the return.
- Tax organizerA questionnaire and document checklist a firm sends clients each season to gather the information needed to prepare their return.
- WorkpapersThe documents, calculations, and notes that support the figures in a return or financial statement and record how the preparer reached them.
- Written Information Security Plan (WISP)A written plan describing how a business protects customer information, required for tax professionals under the FTC Safeguards Rule.
Finance & planning
- 13-week cash flowA week-by-week projection of cash receipts, payments, and balance over the next quarter, used to spot shortfalls before they happen.
- Accounts receivable agingA report that groups unpaid customer invoices by how long they have been outstanding, used to manage collections and forecast receipts.
- Budget varianceThe difference between budgeted and actual results for a period, analyzed to understand what changed and why.
- Cash conversion cycleThe time between paying for inputs and collecting cash from customers, combining inventory, receivable, and payable days.
- Cash runwayHow long a business can keep operating with its current cash and expected net cash flow before it runs out.
- Days sales outstanding (DSO)The average number of days it takes a business to collect payment after a sale, calculated from receivables and revenue.
- Driver-based planningBuilding forecasts from the operational drivers behind the numbers, such as volume, price, headcount, or acres, instead of typing in totals.
- Headcount planA plan of roles, start dates, and fully loaded compensation costs, used to forecast payroll and test hiring decisions.
- Management reportingRegular internal reports that give owners, executives, or boards the financial and operating information they need to make decisions.
- Operating budgetThe plan of expected revenue and operating expenses for a period, adopted by management or a board as the target for the year.
- Rolling forecastA forecast that is updated regularly and always extends a fixed period into the future, rather than stopping at the end of the fiscal year.
- Run rateA projection of annual performance based on recent results, such as multiplying the latest month's revenue by twelve.
- Scenario planningModeling alternative assumptions, such as a new hire, a price change, or slower collections, separately from the baseline plan before deciding.
- Three-statement modelA financial model in which the income statement, balance sheet, and cash flow statement are linked so that changes flow through all three.
- Working capitalCurrent assets minus current liabilities, a measure of the short-term resources a business has to fund daily operations.
Construction
- Certificate of insuranceA document issued by an insurer or agent summarizing a business's insurance coverage, often required before a contractor can start work.
- Certified payrollWeekly payroll reports required on many government-funded construction projects to show workers were paid prevailing wages.
- Change orderA written amendment to a construction contract that changes the scope, price, or schedule of the work.
- Job costingTracking labor, materials, equipment, and subcontract costs by job and cost code to compare actual costs with the estimate.
- Lien waiverA document in which a contractor or supplier gives up some or all of its mechanic's lien rights in exchange for payment.
- Over- and under-billingThe difference between what a contractor has billed on a job and the revenue it has earned based on progress.
- Pay applicationA contractor's formal request for a progress payment, showing work completed to date against the schedule of values.
- Percentage of completionA method of recognizing contract revenue over time based on progress, commonly measured by costs incurred relative to total estimated costs.
- RetainageA portion of each construction payment that the owner or general contractor withholds until the job is complete, to secure performance.
- WIP scheduleA work-in-progress report comparing each job's estimated costs, costs to date, and billings to measure progress and over- or under-billing.
Agriculture
- Breakeven priceThe selling price per unit at which a farm's revenue covers its costs, calculated from expected costs and expected yield.
- Commodity price riskThe risk that prices for crops, livestock, or inputs move unfavorably between the time a decision is made and the time of sale or purchase.
- Cost per acreThe total of seed, fertilizer, chemicals, operations, land, and overhead costs for a crop, divided by the acres planted.
- Crop insuranceInsurance that protects farmers against losses in crop yield or revenue, largely provided through the federal crop insurance program.
- Farm operating loanShort-term financing that covers a farm's annual operating costs until crops or livestock are sold, typically repaid within the production cycle.
- Schedule FThe IRS form individual farmers use to report farm income and expenses on their federal income tax return.
Associations & nonprofits
- 501(c)(6) organizationA tax-exempt business league, such as a trade association or chamber of commerce, organized to improve conditions in a line of business.
- Association management system (AMS)Software that manages an association's members, dues, renewals, events, and communications in one database.
- Deferred revenueCash received for goods or services not yet delivered, such as annual dues paid in advance, recorded as a liability until earned.
- Form 990The annual information return most tax-exempt organizations file with the IRS, reporting finances, governance, and activities.
- Member retention rateThe share of members at the start of a period who renew by the end of it, a core measure of an association's health.
- Unrelated business incomeIncome a tax-exempt organization earns from a regularly conducted trade or business not substantially related to its exempt purpose, which may be taxable.
AI & automation
- AI agentAn AI system that plans and takes actions toward a goal by calling tools, reading information, and deciding on next steps, rather than only producing text.
- AI evaluation (evals)Systematic testing of an AI system against real examples and defined criteria to measure quality before and after changes.
- Context windowThe amount of text, measured in tokens, that a language model can consider at once, including instructions, documents, and conversation.
- Document extractionAutomatically reading documents such as invoices, forms, and statements to pull out structured values for review and use.
- EmbeddingsNumerical representations of text or other data that place similar meanings close together, used for semantic search and retrieval.
- Fine-tuningFurther training a pre-trained AI model on examples from a specific task or domain to change its behavior or style.
- GuardrailsControls that constrain what an AI system may say or do, such as input and output checks, policy rules, permissions, and approval steps.
- HallucinationWhen an AI model produces information that sounds plausible but is false or not supported by its sources.
- Human-in-the-loopA design in which a person reviews, approves, or corrects an AI system's work at defined points before it takes effect.
- Large language model (LLM)An AI model trained on large amounts of text that can generate and interpret language, and the engine behind most modern AI assistants.
- Persistent memory (AI)The ability of an AI system to retain relevant preferences and context across separate sessions, so later requests build on earlier ones.
- Prompt injectionAn attack in which text supplied to an AI system, directly or hidden in a document or web page, tries to override its instructions.
- Retrieval-augmented generation (RAG)A technique that retrieves relevant documents from a trusted source and gives them to a language model, so answers are grounded in that material.
- Workflow automationUsing software to carry out repeatable steps in a business process, such as routing, data entry, notifications, and approvals.
Security & resilience
- 3-2-1 backup ruleKeep three copies of important data, on two different types of storage, with one copy offsite.
- Audit logA chronological record of who did what, and when, in a system, used for accountability, investigation, and compliance.
- Encryption in transit and at restProtecting data with encryption while it travels over networks and while it is stored on disks, databases, and backups.
- Incident response planA documented plan for detecting, containing, investigating, and recovering from a security incident, including who to contact and when.
- Multi-factor authentication (MFA)Sign-in that requires two or more independent proofs of identity, such as a password plus a code from an authenticator app.
- Network segmentationDividing a network into separate zones, such as office, guest, cameras, and equipment, with rules controlling traffic between them.
- Patch managementThe process of tracking, testing, and applying software updates to operating systems, applications, and devices on a regular schedule.
- Phishing and business email compromiseDeceptive messages that trick people into revealing credentials, opening malware, or sending money, including fraudulent payment requests from compromised accounts.
- Principle of least privilegeGiving every person, system, and AI agent only the minimum access needed to do its job, and no more.
- Role-based access control (RBAC)Granting permissions to roles, such as preparer, reviewer, or administrator, and assigning people to roles, rather than configuring each user individually.
- RPO and RTORecovery point objective, how much data you can afford to lose, and recovery time objective, how quickly a system must be restored.
- Single sign-on (SSO)An arrangement in which people sign in once with a central identity provider and gain access to multiple applications without separate passwords.
- VLANA virtual local area network that separates groups of devices logically on the same physical network equipment.
- Zero trustA security model that verifies every user, device, and request explicitly instead of trusting anything simply because it is inside the network.
Web & software
- APIAn application programming interface, a defined way for one piece of software to request data or actions from another.
- CI/CDContinuous integration and continuous delivery, the automated pipeline that tests every change and deploys it safely and repeatably.
- Client portalA secure, signed-in website where clients exchange documents, answer requests, sign agreements, and receive results.
- Content delivery network (CDN)A distributed network of servers that caches and delivers website content from locations close to visitors, improving speed and resilience.
- Core Web VitalsGoogle's metrics for real-world page experience, covering loading speed, responsiveness to input, and visual stability.
- Data validationChecks that data is complete, correctly formatted, and consistent before it is accepted or used in calculations and reports.
- ETLExtract, transform, load, the process of pulling data from sources, cleaning and reshaping it, and loading it into a target system.
- Event trackingRecording meaningful user actions in a website or product, such as sign-ups, form submissions, or feature use, for analytics.
- Feature flagsSwitches in software that turn features on or off for some or all users without deploying new code.
- IdempotencyThe property that performing the same operation more than once has the same effect as performing it once, preventing duplicates on retries.
- Infrastructure as codeDefining servers, networks, and cloud resources in version-controlled files, so environments can be created and changed repeatably.
- IntegrationSoftware that connects two or more systems so data and events move between them reliably, such as a payment provider and a CRM.
- Lead routingAutomatically sending each new inquiry to the right person or team based on rules such as service, location, or size.
- Multi-tenant architectureA software design in which one application serves many customer organizations while keeping each one's data and settings separate.
- ObservabilityThe ability to understand what a system is doing from its logs, metrics, and traces, so problems can be detected and diagnosed quickly.
- Payment processingThe systems and providers that authorize, capture, and settle card and bank payments for online and in-person sales.
- SaaS MVPThe minimum viable version of a software-as-a-service product, with enough functionality to deliver real value and learn from paying users.
- Service level objective (SLO)A measurable target for a system's reliability or performance, such as availability or response time, agreed with the people who depend on it.
- Single source of truthAn agreed authoritative location for each piece of data, so every report and system draws from the same records.
- Technical debtThe future cost created by shortcuts and outdated decisions in software, paid as slower changes, more bugs, and higher risk.
- Technical SEOThe site structure, performance, and metadata work that helps search engines crawl, understand, and index a website correctly.
- WCAGThe Web Content Accessibility Guidelines, the international standard for making websites usable by people with disabilities.
- WebhookAn automatic message one system sends to another when an event happens, such as a payment succeeding or a form being submitted.
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