Accounting is a language of precision. But for a modern firm owner, fluency in debits and credits isn’t enough. You are navigating a complex landscape of tax regulation, SaaS metrics, valuation ratios, and legal structures.
Whether you are explaining the nuances of an S Corp to a founder, analyzing your firm’s Realization Rate, or integrating a new API, a misunderstanding can cost you billable hours—or credibility.
This is not just a glossary. It is a strategic reference guide designed for growth-minded accounting firms. We have organized 80+ essential terms by function, giving you the context you need to lead your firm and advise your clients effectively.
# Business Structures & Entities
Advising clients on the right legal structure is one of the highest-value services you provide. Distinguishing between these entities is critical for tax planning.
C Corp (C Corporation)
A legal structure that is a separate entity from its owners. It can have an unlimited number of shareholders and is taxed independently.
- Advisor’s Take: C Corps are the standard for high-growth startups seeking venture capital because they allow for different classes of stock. However, they face double taxation (taxes on corporate profit + taxes on shareholder dividends).
S Corp (S Corporation)
A tax designation (not a business entity type) that allows corporations to pass income, losses, deductions, and credits through to their shareholders for federal tax purposes.
- Advisor’s Take: The S Corp election is a powerful tool for tax savings in the US. It avoids double taxation and allows owners to save on self-employment taxes by splitting income between a “reasonable salary” and distributions. Note that it is limited to 100 shareholders.
LLC (Limited Liability Company)
A hybrid business structure that combines the liability protection of a corporation with the pass-through taxation of a partnership or sole proprietorship.
- Advisor’s Take: The most flexible option for small businesses. Owners are protected from personal liability for business debts. Crucially, an LLC can choose how it wants to be taxed (as a Sole Prop, Partnership, S Corp, or C Corp).
LLP (Limited Liability Partnership)
A partnership where some or all partners have limited liabilities. It exhibits elements of both partnerships and corporations.
- Context: Commonly used by professional groups like accountants, lawyers, and architects. It prevents one partner from being liable for the malpractice or negligence of another partner.
Sole Prop (Sole Proprietorship)
An unincorporated business owned and run by one individual. There is no distinction between the business and the owner.
- Risk: The easiest to set up, but the riskiest. The owner has unlimited personal liability for all business debts.
PLC (Public Limited Company)
A company (typically in the UK and Commonwealth) whose shares may be freely sold and traded to the public. Roughly equivalent to a publicly traded C Corp in the US.
# Practice Management & Firm Efficiency
These metrics determine if your firm is profitable or just busy. If you use practice management software like Uku, these are the numbers you should track daily.
ARR (Annual Recurring Revenue)
The predictable revenue your firm expects to receive every year from subscription-based clients (e.g., monthly bookkeeping retainers).
- Why it matters: ARR is the gold standard for firm valuation. Shifting hourly work to fixed-fee retainers increases your ARR and stabilizes cash flow.
MRR (Monthly Recurring Revenue)
The monthly version of ARR. It normalizes income from varied billing cycles into a consistent monthly figure.
WIP (Work In Progress)
Billable time and expenses that have been incurred or completed but not yet invoiced to the client.
- Uku Tip: High WIP is a cash flow killer—it essentially means you are lending your time to clients for free. Monitor your WIP Report weekly to ensure billing doesn’t lag behind work.
Realization Rate
The percentage of recorded billable time that is actually invoiced and collected.
- Formula:
(Total Billed Revenue ÷ Total Billable Hours × Standard Rate) × 100 - Benchmark: Aim for >85%. If your Realization Rate is low, your team is likely doing “shadow work” or cleaning up client messes without charging for it.
Utilization Rate
The percentage of available time an employee spends on billable client work versus internal administration.
- Target: Typically 75-80% for accountants/producers. If utilization is low, check if your workflow automation is sufficient.
CAC (Customer Acquisition Cost)
The total cost (marketing spend + sales time) required to acquire a single new client.
- Example: If you spend $2,000 on LinkedIn ads to get one client, your CAC is $2,000.
CLV (Customer Lifetime Value)
The total revenue expected from a single client over the entire duration of their relationship with your firm.
- Strategy: Your CLV should be at least 3x your CAC for a healthy business model.
FTE (Full-Time Equivalent)
A unit to measure employed persons in a way that makes them comparable (e.g., two half-time employees equal 1.0 FTE).
- Context: Critical for capacity planning in Uku to ensure you don’t overbook your team during tax season.
TAT (Turnaround Time)
The time taken to complete a process or fulfill a request from start to finish. Fast TAT is a competitive advantage.
SLA (Service Level Agreement)
A commitment between a service provider and a client.
- Example: “We guarantee monthly reports will be delivered by the 10th of the month.” SLAs protect your team from unreasonable “ASAP” demands.
NPS (Net Promoter Score)
A metric used to measure customer loyalty. “On a scale of 0-10, how likely are you to recommend us to a friend?”
- Context: In accounting, referrals are life. A low NPS is a leading indicator of future churn.
OKR (Objectives and Key Results)
A goal-setting framework for defining and tracking objectives and their outcomes. Used by modern firms to align team goals.
KPI (Key Performance Indicator)
A quantifiable measure used to evaluate the success of an organization or employee (e.g., “Files completed per week”).
SOP (Standard Operating Procedure)
Documented processes that a company has in place to ensure services are delivered consistently.
- Uku Tip: Store your SOPs directly in your Uku task descriptions so staff always know exactly what to do.
CRM (Customer Relationship Management)
Software used to manage interactions with current and potential clients. Modern practice management tools often include CRM features.
# Profitability & Valuation Analysis
The language of CFOs and strategic advisors. These are the terms you use when valuing a business or advising a client on growth.
EBITDA
Earnings Before Interest, Taxes, Depreciation, and Amortization. A proxy for operating cash flow. It strips out financing and accounting decisions to show raw profitability. This is the primary metric used when buying or selling a business.
EBIT
Earnings Before Interest and Taxes. An indicator of a company’s profitability, calculated as revenue minus expenses, excluding tax and interest.
ROI (Return on Investment)
A performance measure used to evaluate the efficiency of an investment.
- Formula:
(Net Profit ÷ Cost of Investment) × 100
ROE (Return on Equity)
Measures financial performance by dividing net income by shareholders’ equity. It shows how effectively management is using investors’ money.
ROA (Return on Assets)
An indicator of how profitable a company is relative to its total assets.
GP (Gross Profit)
Revenue minus Cost of Goods Sold (COGS). It shows how much money is left over to pay for operating expenses.
NP (Net Profit)
The actual profit after working expenses not included in the calculation of gross profit have been paid. The “Bottom Line.”
CAGR (Compound Annual Growth Rate)
The mean annual growth rate of an investment over a specified time period longer than one year. It smooths out the volatility of year-to-year growth.
WACC (Weighted Average Cost of Capital)
The average rate a business pays to finance its assets (debt + equity).
EPS (Earnings Per Share)
The portion of a company’s profit allocated to each outstanding share of common stock.
P/E Ratio (Price-to-Earnings)
The ratio for valuing a company that measures its current share price relative to its per-share earnings.
Burn Rate
The rate at which a new company is spending its venture capital to finance overhead before generating positive cash flow from operations.
- Advisory: Critical for startup clients. “You have a burn rate of $20k/month and $100k in the bank; you have 5 months of runway.”
Churn Rate
The annual percentage rate at which customers stop subscribing to a service.
# Tax, Regulatory & Complianc
Navigating the alphabet soup of government agencies and modern compliance requirements.
IRS (Internal Revenue Service)
The US federal agency responsible for tax collection and tax law enforcement.
AGI (Adjusted Gross Income)
Gross income minus specific adjustments (like student loan interest). It is the starting point for calculating taxable income.
EIN (Employer Identification Number)
The unique nine-digit number assigned by the IRS to business entities. It is essentially the “Social Security Number” for a business.
SSN (Social Security Number)
Tax ID for individuals in the US.
VAT (Value Added Tax)
A consumption tax placed on a product whenever value is added at each stage of the supply chain. Common in the EU and UK.
GST (Goods and Services Tax)
A value-added tax levied on most goods and services sold for domestic consumption. Common in Canada and Australia.
SALT (State and Local Tax)
Taxes imposed by state and local governments (not federal). High SALT can significantly impact deductibility for individuals.
NOL (Net Operating Loss)
A period in which a company’s allowable tax deductions are greater than its taxable income. NOLs can often be carried forward to offset tax in profitable future years.
R&D Credit (Research and Development)
A tax incentive provided by the government to encourage companies to invest in innovation.
1099
A series of documents the IRS refers to as “information returns.” The most common is the 1099-NEC, used to report payments to independent contractors (freelancers).
W-2
The form that an employer must send to an employee and the IRS at the end of the year. It reports the employee’s annual wages and the amount of taxes withheld.
K-1
A tax form used by partnerships, S Corps, and ETFs to report each partner’s share of income, losses, deductions, and credits.
AML (Anti-Money Laundering)
Laws and regulations designed to prevent criminals from disguising illegally obtained funds as legitimate income.
- Compliance: Modern firms must run AML checks during client onboarding.
KYC (Know Your Customer)
The mandatory process of verifying the identity of your clients. This is a critical component of AML compliance.
UBO (Ultimate Beneficial Owner)
The person who ultimately owns or controls a company. Identifying the UBO is required for transparency and compliance.
FBAR (Foreign Bank and Financial Accounts)
A report that must be filed by US persons with a financial interest in or signature authority over foreign financial accounts exceeding certain thresholds.
# Core Accounting & Financial Statements
The fundamentals. These are the building blocks of financial reporting.
AP (Accounts Payable)
Money owed by a business to its suppliers. It is recorded as a liability.
AR (Accounts Receivable)
Money owed to a business by its customers. It is recorded as an asset.
GL (General Ledger)
The master set of accounts that summarize all transactions occurring within an entity.
TB (Trial Balance)
A bookkeeping worksheet in which the balance of all ledgers are compiled into debit and credit account column totals. Used to ensure books are balanced.
BS (Balance Sheet)
A financial statement that reports a company’s assets, liabilities, and shareholder equity at a specific point in time.
P&L (Profit and Loss)
Also known as the IS (Income Statement). A financial statement that summarizes the revenues, costs, and expenses incurred during a specified period.
CFS (Cash Flow Statement)
A financial statement that summarizes the amount of cash and cash equivalents entering and leaving a company. “Profit is vanity, cash is sanity.”
COA (Chart of Accounts)
An index of all the financial accounts in the general ledger of an organization. A clean COA is essential for accurate reporting.
JE (Journal Entry)
The manual logging of a transaction into accounting records.
AJE (Adjusting Journal Entry)
Entries made at the end of an accounting period to record unrecognized income or expenses for that period.
COGS (Cost of Goods Sold)
The direct costs attributable to the production of the goods sold in a company.
COS (Cost of Services)
The service-industry equivalent of COGS. For an accounting firm, this includes the salaries of the billable staff.
OPEX (Operating Expenses)
Expenses incurred in the course of ordinary business, such as rent, marketing, and administrative salaries.
CAPEX (Capital Expenditures)
Funds used by a company to acquire, upgrade, and maintain physical assets such as property, buildings, or technology.
# Payroll & Compensation
Essential acronyms for firms offering payroll services.
PTO (Paid Time Off)
A policy that provides a bank of hours in which the employee pools sick days, vacation days, and personal days.
FICA (Federal Insurance Contributions Act)
A US federal payroll tax deducted from each paycheck to fund Social Security and Medicare.
FUTA (Federal Unemployment Tax Act)
A payroll tax paid by employers on employee wages to fund federal unemployment agencies.
SUTA (State Unemployment Tax Authority)
State-level unemployment tax paid by employers.
YTD (Year-to-Date)
Refers to the period of time beginning the first day of the current calendar year or fiscal year up to the current date.
# Technology & SaaS
You cannot run a scalable firm today without speaking the language of the “Tech Stack.”
API (Application Programming Interface)
A software intermediary that allows two applications to talk to each other.
- Example: Uku’s API allows it to sync client data directly with your other tools, reducing manual data entry errors.
SaaS (Software as a Service)
A software licensing and delivery model in which software is licensed on a subscription basis and is centrally hosted (like Uku, Xero, or QBO).
ERP (Enterprise Resource Planning)
Integrated management of main business processes, often in real-time. Examples include NetSuite or SAP. Typically used by larger clients.
OCR (Optical Character Recognition)
Technology that converts different types of documents (scanned paper, PDF) into editable and searchable data. Used by expense management tools to read receipts.
UX / UI (User Experience / User Interface)
The look, feel, and usability of software. Good UX in a client portal reduces the number of support emails you receive.
CSV (Comma-Separated Values)
A simple file format used to store tabular data, such as a spreadsheet or database. The universal format for importing/exporting data.
2FA / MFA (Two-Factor / Multi-Factor Authentication)
An electronic authentication method in which a user is granted access only after successfully presenting two or more pieces of evidence. Mandatory for security in modern firms.
# General Business & Timing
Shortcuts for everyday professional communication.
B2B (Business to Business)
Commerce between companies. Accounting firms are typically B2B service providers.
B2C (Business to Consumer)
Commerce between a company and an individual consumer.
FY (Fiscal Year)
A one-year period that companies use for financial reporting and budgeting. It may not match the calendar year.
Q1 / Q2 / Q3 / Q4 (Quarters)
The four three-month periods of the financial year.
- Context: Q1 is typically “Tax Season” for US firms.
MoM (Month-over-Month)
Comparing a metric (like revenue) to the previous month. Vital for tracking immediate growth trends.
YoY (Year-over-Year)
Comparing a metric to the same period in the previous year. This is a better measure for seasonal businesses like accounting firms.
EOD (End of Day)
A common deadline term. “Please finish this report by EOD.”
EOM (End of Month)
Refers to the deadline for closing the books or billing.
TBD (To Be Determined)
Information that is not yet known or decided.
NDA (Non-Disclosure Agreement)
A legal contract between at least two parties that outlines confidential material, knowledge, or information that the parties wish to share with one another for certain purposes.
Is your firm’s workflow as sharp as your vocabulary? Knowing the terms is step one. Managing the work is step two. Uku helps you track your WIP, improve your Realization Rate, and automate your AML workflows, all in one beautiful place.
