Startup Definitions

Profit and loss account

A profit and loss account is really nothing more than a list of all revenues and costs of a company. The outcome of this enumeration therefore directly indicates the financial situation of your company.Have you calculated a certain profit percentage? Or do you want to compare your financial situation with previous years? Your profit & loss account makes it clear.


Depreciation is incurred after an investment that lasts longer than a year and costs more than €450.You do not charge the expense to your profit at once, but you spread the costs over the life of your investment.
Because business assets last for a number of years, you may not deduct all costs in the year of purchase. Instead, you must depreciate. This means that you divide the costs over the years in which you use the asset. Each year you can deduct a portion of the costs. Do you buy an asset for less than €450? Then you deduct the amount in one time as costs. The easiest way to explain this is by means of an example. Suppose you buy a car, then of course you expect that it will last a number of years. We're talking about the lifetime of your purchase (or investment). This means that you will probably pay the expense at once, but that you can spread the costs over the years of the expected life span. Distributing the costs incurred is called depreciation.

Balance sheet

A balance sheet is part of your bookkeeping and a snapshot that shows the financial situation of your business. On your balance sheet you will find all your assets, debts, and also your equity at a given moment. Your balance sheet consists of two sides, namely the assets and liabilities, the most important feature of a balance sheet is that it must be balanced at all times.

Assets on the balance sheet

The left side of the balance sheet is the asset side (also called the debit side). The assets side contains all your possessions, such as your business premises, stocks, means of transport, but also the money still to be received (debtors).

Fixed assets

Fixed assets are assets that are tied to your business for a long time, have a value higher than €450and are used for business operations. They should be included in the balance sheet of your accounts.Fixed assets consist of three types, namely: intangible fixed assets, tangible fixed assets and financial fixed assets. In general, it can be said that fixed assets are possessions that are active in the business for more than one year. Fixed assets are part of the balance sheet and are on the left (assets) side.
What exactly is covered by fixed assets?
Fixed assets are business assets that are not intended to be resold and are active in your business for more than one year. As mentioned, there are several types of fixed assets to define, namely: intangible fixed assets, tangible fixed assets and financial fixed assets. We explain the types below.
Tangible assets:
These are basically the tangible assets of a business. Examples include land and buildings, machineryand equipment, as well as your company laptop. Your tangible assets also include your inventory,

Intangible fixed assets:
Intangible fixed assets are the non-tangible assets that are tied to your business. We are talking about licenses, patents or, for example, development costs.
Financial fixed assets: These are holdings in other companies, shares or other financial receivables. Note that all of the fixed assets we list are tied to your business for more than one year. Is some thing active in your company for a shorter period of time? Then we are talking about current assets.

Current assets

Current assets are possessions in your company that can only be used during one production process. In other words, they are assets that can be "quickly" (within a year) disposed of or converted into cash.This actually puts current assets in direct opposition to fixed assets that are in your business for longer than a year (such as your company building). Examples of current assets are: an inventory of goods, raw materials, but also accounts receivable.

What exactly is covered by these current assets?
You'll find your current assets on the assets side of your balance sheet, but what does it all fall under?

We put it in a row:
First of all, we talk about the stock. This includes the goods needed to create your final product, but also those final products that have not yet been sold. Packaging materials also fall under your stock.

Accounts receivable
Accounts receivable are also included in current assets. For example: you have sent an order to your customer and the invoice has been sent along. The customer has received his package, but the invoice is still outstanding. These are debtors (or receivables) for which you expect payment to come your way within a short period of time.

Liquid assets
Liquid assets such as the balance on your bank account(s) and suspense accounts but also your cash account (cash).
Do you send your invoices with an iDEAL payment link? Then the Mollie payments also fall under your current assets. Mollie payments will be converted "smoothly" into cash on your bank account.

Liabilities on the balance sheet

In most cases, every asset also has a cost. When we ask ourselves the question how our possessions are paid for, we come to the liabilities side. You can pay for your possessions with your own capital, but also with borrowed money. Those financial obligations (debts) are found on the right side of the balance sheet, the liabilities side. Liabilities are all the resources with which the company is financed, in short, the debts of the company. The liabilities are on the right side of the balance sheet and therefore contain mainly the debts of your company. This includes, for example, outstanding accounts (creditors) and the VAT that still has to be paid. The liabilities are actually all financial obligations that you have, but also your equity is part of the liabilities. 

Bank book

A bankbook is part of the accounting and consists of all expenses and receipts that occur on your business bank account. In the bank book you find all transactions according to the bank statements of your bank. The bank book is one of the so-called diaries that belong to an administration and it also looks a bit like the cash book, except that this time it concerns electronic payments.

Cash book

A cash book is part of your accounting. If you do business with cash, you need to keep a cash book. A cash book contains all the cash transactions that are made in your business. The cash book consists of both cash expenses and income and provides an overview of the daily cash flows.
Equity Equity is equal to all possessions minus all debts, or assets minus liabilities. Equity is part of the balance sheet of your company's administration. The central question you can always ask here is, "What is my asset and what is borrowed from it?" 

General ledger accounts

General ledger accounts are crucial in keeping your accounting records organized. You'll find ledger accounts on your balance sheet, but also on your income statement. For example, you have "cash and cash equivalents" on your balance sheet, and "selling expenses" on your income statement. General ledger accounts categorize, so to speak, your income and expenses, as well as your assets and liabilities.

Annual Accounts

In short, an annual account shows the financial situation of your company per year.
What does an annual account consist of?
What your annual accounts should consist of depends on the size of your company, but generally speaking an annual account consists of both your balance sheet and your profit & loss account, and possibly an explanation of both.


Inventory on your balance sheet is a fixed asset account that consists of investments of business assets used to run your business. Inventory examples are your desk, laptop or other tools. So they are possessions of a company, this means that you find them back on the assets side of your balance sheet.
The main item under your Inventory account are investments in business assets.
These are purchases you have made so you can do your job well. Think of a laptop or desk. What you can keep as a standard here is that it concerns assets that last longer than one year, that are not intended for sale, and that at purchase amount to more than €450, - excl.
- Inventory examples:
- Computer / laptop
- Furniture such as a desk or other office furnishings
- Power tools 

Accounts Receivable

Accounts receivable are your customers that you have yet to receive money from. You find your debtors on the assets side of your balance sheet. On this side are all your assets, including the money you are yet to receive. For example: you have delivered a service and sent the invoice to your customer. If the invoice has not yet been paid, the customer (the buyer) has an outstanding debt with you. We call this customer the debtor in the story


Creditors are the suppliers who you have not immediately paid. They have provided you with goods or a service, but the bill (or debt) is still open. In that case you are actually called the debtor in the story, and the creditors (the suppliers) are your creditors. This is where you should look on your balance sheet. 


In accounting, receivables are equivalent to a claim for money. There are short-term receivables and long-term receivables. Receivables are on the balance sheet of your bookkeeping. In this article, we explain further what receivables entail. 
Short-term receivables on the balance sheet
Current receivables are receivables that you expect to be paid within a year. They fall under current assets on your balance sheet. Examples of current receivables are your debtors, but also the VAT to be received back, receivables from shareholders or participants or participations. 
Receivables from debtors
Suppose you have sent out an invoice, but it has not yet been paid. This means that you have a claim on someone else. This makes you the creditor and the customer the debtor. The customer owes you money. Would you like to have insight into your debtors? Then look at the assets side of your balance sheet, where you will find the debtors under your current assets. 
Claim by creditors
Who is claiming what from whom? It could be that you still owe money. This means that someone else has a claim on you, and this makes you the creditor. You will find this on the liabilities side of your balance sheet under accounts payable.
Long-term receivables on the balance sheet
Long-term receivables are receivables that you expect to be repaid later than one year. They fall under fixed assets. 


A stock consists of goods that are available for production, sale or delivery. These goods all have a value and must be reflected in your books and processed on your balance sheet. Also goods that are already in use for production are part of your stock. On your balance sheet, you will see inventory under your current assets. So basically this means that stock consists of goods that are "smoothly" gone again, or can be converted into money. 

Cash and cash equivalents

Cash and cash equivalents are money available in the company. This is the business bank account,cash account, credit card account, but also accounts of payment providers such as Mollie, Paypal, etc.The literal translation of "Liquid" is liquid, referring to the fact that money is always in "motion".

Current Liabilities

Current liabilities are payment obligations (debts) with a term of less than one year. In your accounting, current liabilities are also called short-term debt. A short-term debt must be placed on the balance sheet when there is a contractual payment obligation of less than 1 year. The reason that a distinction is made between these two categories is that you as an entrepreneur have a better understanding of how your business is doing and whether it can meet its payment obligations.

Current liabilities on the balance sheet 
On the balance sheet, current liabilities are on the right-hand side (Liabilities). At Current liabilities you can think of taxes to be paid (VAT), wages, but also short-term loans. Besides current liabilities, there are also long-term debts where the term of an obligation is longer than one year. 

Examples of current liabilities
First of all, your current liabilities include the account payable VAT. When you sell something, you receive VAT on it, which you then have to pay, this is seen as a short-term debt. 

Long-term debts

Long-term debts are debts with a payment obligation of more than one year. In accounting, non- current liabilities are also referred to as long-term debt. It often concerns repayments of loans.

The reason that a distinction is made between these two categories is so that you as an entrepreneur have a better understanding of how your business is doing and whether it can meet its payment obligations. Long-term debts on the balance sheet

On the balance sheet, long-term debts are listed on the right-hand side (Liabilities). In addition to long-term debts, there are also short-term debts where the term of an obligation does not exceed one year.

Examples of non-current liabilities
The most obvious example is loans, for example a mortgage loan. Such a loan is usually taken out with the bank, and there should be a fixed asset against it as security. In this case, this "fixed asset" is the property for which the loan has been granted. As soon as you are no longer able to repay the loan, the bank can claim this property for sale.

Another way of providing security is through stocks and debtors. If the loan can't be repaid, the creditor can sell your stocks and claim the profits, or go after your debtors to get money.

Other examples of long-term debt are:
- Lease contracts, for example, for leasing a car.
- A startup loan for your business.
- A loan through a lender.
- Loan for the purchase of a stock of products. 

Difference between costs and expenses

Costs and expenses are closely related, yet there are differences.

For example, costs end up on your profit and loss account, and expenses can also appear as stock on your balance sheet, for example. It is therefore important to be able to distinguish between both concepts for your administration. No expense yet, but already costs It may be the case that you already have expenses, while you have not yet incurred any.

For example: you make a purchase and receive an invoice. You have not yet paid it, so you have not yet created an expense. You then have, as it were, a short-term debt on your balance sheet. On the other hand, your purchase already belongs to the expenses on your profit & loss account. No costs, but an expense

Eventually you pay your outstanding invoice. Now you do incur an expense, and so the debt on your balance sheet is cancelled. On your profit & loss account nothing changes. You do not incur any expenses, but these have of course already been processed in your profit & loss account.