Glossary

The vocabulary our courses use, defined plainly. Every term appears in the lessons in context.

1

1099-NEC: The form a client files when they pay an unincorporated person $600 or more in a year. Receiving one means the IRS also heard about that income.

Bailee coverage: Insurance for other people’s property while it is in your care — the customer laundry in your car, the appliance in your van.
Billable hour: An hour you can actually charge for. Travel, quoting, bookkeeping, and fixing your own equipment are not billable, which is why billable share decides whether a price works.
Billable share: The fraction of your working hours that earns revenue. New operators are often shocked by it; plenty start below sixty percent.
BSR: Best Sellers Rank — Amazon’s per-product sales ranking. Lower is better; used as a demand signal, not a promise.

Call-out minimum: The charge that applies the moment you show up, covering travel and the fact that a twenty-minute job still consumes half a morning.
Cash conversion cycle: The time between paying for inventory and getting the sales money back. Long cycles eat cash even when the business is profitable.
COGS: Cost of goods sold — what a unit of product costs you before any of your time or overhead. The floor under any product price.
Cottage food law: State laws letting home kitchens sell certain low-risk foods, usually with revenue caps, label rules, and occasional pet restrictions.

DBA: “Doing business as” — a registered trade name for a sole proprietorship or LLC operating under something other than the owner’s legal name.

E&O insurance: Errors and omissions — professional liability coverage for mistakes that cost a client money. Standard for notaries, billers, and consultants.
Effective rate: Your revenue divided by every hour you worked, not just the billable ones. The exchange rate between your life and your business.
EIN: Employer Identification Number — the IRS number for a business. Free from the IRS directly; nobody should charge you to file for one.

General liability (GL): Insurance for bodily injury and property damage a client or bystander suffers because of your work. The baseline policy for trades.
Gross margin: Revenue minus cost of goods, as a percentage of revenue. Not the same as markup — a 100% markup is a 50% gross margin.

LLC: Limited liability company — a state entity that separates business liabilities from personal assets. Cheap to form ($35–$500 depending on state); the timing of forming one is a judgment call.

Margin vs. markup: Markup is added to cost; margin is the share of the price that is profit. Confusing them is the classic pricing mistake.

Net margin: What remains of revenue after everything — product cost, overhead, your tools, the payment fees. The honest bottom line.
Not-to-exceed (NTE): A quoted ceiling on a job: the number you will not pass without calling the client first. The tool that makes fixed quotes safe to give.

Overhead: Everything the business spends whether or not a client calls — insurance, software, fuel, the accountant. Divided across billable hours in your floor.

Presale: Selling the product before building it. The antidote to spending a season building something the market was never asked to buy.

Quarterly estimated taxes: Self-employed people pay tax four times a year as income arrives, not once in April. Missing them adds penalties on top.

Runway: Months you can live on what reliably arrives — cash, net severance, remaining unemployment — divided by your survival budget. Retirement accounts and credit are not runway.

Schedule C: The IRS form where sole proprietors report business profit or loss, attached to your personal return.
SDE: Seller’s discretionary earnings — the total financial benefit a full-time owner gets from a business. The standard small-business valuation base.
Self-employment tax: 15.3% on net self-employment earnings — Social Security and Medicare, the halves your old employer used to split with you.
Sole proprietorship: The default business structure: you, earning, reportable on Schedule C. No formation needed; a DBA and an EIN can come when they earn their keep.
Slotting fee: What some retailers charge just to place your product on shelf. One of the costs that separates wholesale from direct sales.
Surety bond: A bond that pays the public if you violate your duty, with the surety then coming after you. Many states require one from notaries instead of (or alongside) an E&O policy.

Warm fifty: The fifty people who already know you — neighbors, former coworkers, the school group chat. Where the first five jobs in a service business come from.

These terms are taught in full in the free method series.