Glossary terms starting with E

Early Payment Discount

An early payment discount is a price reduction offered by vendors for paying invoices before the standard due date.

Earned Fee

An earned fee is compensation that belongs to the service provider because the triggering work has been completed or conditions have been met.

Earned Value

Earned value is the budgeted cost of work actually completed on a project, providing a measure of project progress in financial terms.

Earnout

An earnout is a contingent payment in M&A transactions where a portion of the purchase price depends on the acquired business achieving specified performance targets post-acquisition.

EBITDA

EBITDA stands for earnings before interest, taxes, depreciation, and amortization.

Economic nexus

Economic nexus is the level of business activity in a state that creates a tax filing obligation there, even without a physical office.

Effective Billing Rate

Effective billing rate is the actual revenue earned per hour worked, calculated by dividing total revenue by total hours invested in client work (including non-billable project time).

Effective Collection Rate

Effective collection rate measures the percentage of billed revenue actually collected after accounting for write-offs, discounts, and adjustments, revealing true collection performance.

Effective Hourly Rate

The effective hourly rate is total collected revenue divided by total hours worked on a matter, client, or for the firm overall.

Effective Rate

An effective rate is what a firm actually earns per hour of work after discounts, write-offs, unbilled time, and slow collections.

Effective Tax Planning

Effective tax planning is the proactive process of structuring business and personal finances to minimize tax liability within legal boundaries, conducted throughout the year rather than only at tax time.

Effective Tax Rate

The effective tax rate is the share of total income that is actually paid in tax.

EIN (Employer Identification Number)

An employer identification number (EIN) is a nine-digit number the IRS assigns to identify a business for tax purposes.

Elimination Entry

An elimination entry removes intercompany transactions when consolidating financial statements of related entities.

Employee Benefits

Employee benefits are non-wage forms of compensation, such as health insurance, retirement plans, paid time off, and training support.

Employee Cost Rate

Employee cost rate is the total hourly cost of an employee, including base salary, benefits, employer taxes, and allocated overhead, representing the true cost of that person's time to the organization.

Employee vs Independent Contractor

Classification depends on economic reality, not labels.

Employer Contribution

An employer contribution is an amount the employer pays toward employee benefits such as retirement plan matching, health insurance premiums, or other benefit programs.

Employer Payroll Taxes

Employer payroll taxes are the taxes a business pays on top of employees' wages, in addition to the amounts it withholds from employees' pay.

Engagement Acceptance

Engagement acceptance is the formal decision to take on a new client or matter after completing intake procedures.

Engagement Budget Tracking

Engagement budget tracking is the ongoing monitoring of actual costs and hours against budgeted amounts for client engagements, providing real-time visibility into project financial performance.

Engagement Economics

Engagement economics is the financial analysis of individual client engagements, examining revenue, costs, realization rates, and profitability at the project level.

Engagement Letter

An engagement letter is a formal document that establishes the terms of a consulting relationship, including the scope of services, deliverables, timeline, fees, payment terms, and other conditions.

Engagement Manager

An engagement manager is a mid- to senior-level consulting role responsible for day-to-day client relationship management and project delivery on specific engagements.

Enrolled Agent

An enrolled agent (EA) is a federally licensed tax professional authorized by the IRS to represent taxpayers in audits, appeals, and collection matters, earning the credential through examination or IRS experience.

Enterprise Value

Enterprise value represents the total value of a business as an operating entity, calculated as equity value plus debt minus cash.

Entertainment Expense

Entertainment expenses are costs for activities generally considered amusement, recreation, or entertainment.

Equity Distribution

An equity distribution is a payment from a business to its owners from profits or capital, rather than as wages.

Equity Reconciliation

Equity reconciliation is the process of verifying that owners' equity accounts accurately reflect contributions, withdrawals, and accumulated earnings, ensuring that the balance sheet equity section ties to the underlying records and transactions.

Errors and Omissions (E&O) Insurance

Errors and omissions (E&O) insurance covers a business when a client claims that a mistake, missed deadline, or inadequate advice caused a financial loss.

Escrow

Escrow is an arrangement where a neutral third party holds funds or assets until specified conditions are met.

Estimated Tax Payments

Estimated tax payments are payments made during the year toward tax on income that is not subject to withholding.

Estimated Tax Voucher

An estimated tax voucher is the payment slip (Form 1040-ES for individuals) accompanying quarterly estimated tax payments, identifying the taxpayer and tax period for proper IRS credit.

Evergreen Retainer

An evergreen retainer is a prepayment that automatically replenishes when drawn down to a specified level.

Excess Distribution

An excess distribution is money taken out of a pass-through entity beyond the owner's tax basis in it.

Executive Summary

An executive summary is a brief overview of a longer document or report, designed for readers who need key information without reading the full content.

Exempt Employee

An exempt employee is a worker classified as exempt from overtime pay requirements under the Fair Labor Standards Act, typically because they meet salary and duties tests for executive, administrative, professional, or other exempt categories.

Exit Planning

Exit planning is the process of preparing a business for an eventual sale, transfer, or succession.

Expense Accrual

An expense accrual is an accounting entry that recognizes an expense incurred but not yet paid or invoiced, ensuring expenses are recorded in the period they occur rather than when payment is made.

Expense Approval

Expense approval is the review and authorization of employee-incurred costs before reimbursement or after corporate card charges.

Expense Categorization

Expense categorization assigns each business expense to the right account in the chart of accounts.

Expense Category Analysis

Expense category analysis examines spending patterns within major expense categories, identifying trends, anomalies, and optimization opportunities.

Expense Reimbursement Policy

An expense reimbursement policy establishes rules for reimbursable employee expenses, documentation requirements, approval processes, and reimbursement procedures.

Expense Report

An expense report is a document employees submit to claim reimbursement for business costs they paid personally, such as travel, meals, and supplies.

Expense Variance

Expense variance measures the difference between actual expenses and budgeted amounts, expressed in dollars and as a percentage, with analysis identifying the causes of the variation.

Extension to File

An extension to file is IRS approval to submit your tax return after the original deadline without late filing penalties.