Glossary for the Finance Officer

You may need to advise your team on financial matters, so you need to understand the jargon involved in setting up your own business.

Refer back to this page whenever you need to.

Cost price

The amount of money you can buy something for, especially in order to sell it on at a higher retail price.

Fixed costs

Business costs that don’t change as sales go up or down.

National Insurance

An additional form of tax paid by most employers, employees, self-employed (and some unemployed) people. Money is taken from wages and paid to the government in return for services like the state pension, and social security benefits.

Profit

A profit is a financial gain. In business, it is the difference between how much money is spent and how much money is made.

Retail price

The amount of money you can sell something for.

Variable costs

Cost that vary according to the activity of a business, e.g the cost of employing staff will vary depending upon the hours a business is open.

VAT

VAT stands for Value Added Tax. This is a government tax on the final consumption of goods and services. It is collected at every stage of production and distribution. In effect this means that anything you buy or pay for will be subject to VAT if value has been added at some point. So you will pay VAT on many goods and services, for example, for a meal in a restaurant, a repair to your computer, a CD or a travel ticket. The standard rate of VAT is currently 15%. You do not have to pay VAT on some goods, such as some foods, books and children's clothing.

More helpful terms are listed in the main Glossary.