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Business Law - Glossary of Terms

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Accounting - The recording, classifying, summarizing and interpreting in a significant manner and in terms of money, transactions and events of a financial character.

Accounts Payable - Trade accounts of businesses representing obligations to pay for goods and services received.

Accounts Receivable - Trade accounts of businesses representing moneys due for goods sold or services rendered evidenced by notes, statements, invoices or other written evidence of a present obligation.

Accrual Accounting - A method of reporting income when earned and expenses when incurred, as opposed to reporting income when received and expenses when paid.

Accrual method - reporting income when it is earned, though one may receive payment in a later year. Expenses are deducted in the tax year they are incurred, whether or not they are paid in the same year.

Accrued Interest - The interest that has accumulated since the last interest payment up to, but not including, the settlement date and that is added to the contract price of a bond transaction. There are two methods for calculating accrued interest: the 30-day-month (360-da

Acquisition - The acquiring of supplies or services by the federal government with appropriated funds through purchase or lease.

Actual Expenses - refers to car and truck expenses. Method used to deduct costs of operating and maintaining a car or truck in your business, for example, depreciation, gas, repairs, etc. Expenses must be divided between business and personal use if used in both.

Affiliates - Business concerns, organizations, or individuals that control each other or that are controlled by a third party. Control may include shared management or ownership; common use of facilities, equipment, and employees; or family interest.

Agent - (1) An individual or firm that effects securities transactions for the accounts of others. (2) A person licensed by a state as a life insurance agent. (3) A securities salesperson who represents a broker-dealer or issuer when selling or trying to sell sec

Amortization - reduction of debt through installed payments.

Amortization - (1) The paying off of debt in regular installments over a period of time. (2) The ratable deduction of certain capitalized expenditures over a specified period of time.

Appreciation - The increase in value of an asset.

Assets - cash, property, and other resources owned by a firm.

Assumptions - The act of assuming/undertaking another's debts or obligations.

Auction - A public sale of goods to the highest bidder.

Authorized Stock - The number of shares of stock that a corporation is permitted to issue. This number of shares is stipulated in the corporation's - state-approved charter, and may be changed by a vote of the corporation's stock-holders.

Automatic Data Processing - *** Data processing largely performed by automatic means. *** The discipline which deals with methods and techniques of automatic data processing. *** Pertaining to data processing equipment such as electrical accounting machines and electronic data proce


Balance Sheet - A report of a corporation's financial condition at a specific time.

Bank Reconciliation - making sure the bank statement, checkbook, and books (ledger, journal, etc.) all agree.

Bankruptcy - A condition in which a business cannot meet its debt obligations and petitions a federal district court for either reorganization of its debts or liquidation of its assets. In the action the property of a debtor is taken over by a receiver or trustee in b

Best And Final Offer - For negotiated procurements, a contractor's final offer following the conclusion of discussions.

Board Of Directors - (1) Individuals elected by stockholders to establish corporate management policies. A board of directors decides, among other issues, if and when dividends will be paid to stockholders. (2) The body that governs the NYSE; it is composed of 20 members who

Break-Even Point - The break-even point in any business is that point at which the volume of sales or revenues exactly equals total expenses -- the point at which there is neither a profit nor loss -- under varying levels of activity. The break-even point tells the manager

Business Birth - Formation of a new establishment or enterprise.

Business Death - Voluntary or involuntary closure of a firm or establishment.

Business Dissolution - For enumeration purposes, the absence from any current record of a business that was present in a prior time period.

Business Failure - The closure of a business causing a loss to at least one creditor.

Business Information Center (Bic) - One-stop locations for information, education, and training designed to help entrepreneurs start, operate, and grow their businesses. The centers provide free on-site counseling, training courses, and workshops and have resources for addressing a broad va

Business Plan - A comprehensive planning document which clearly describes the business developmental objective of an existing or proposed business applying for assistance in SBA's 8(a) or lending Programs. The plan outlines what and how and from where the resources neede

Business Start - For enumeration purposes, a business with a name or similar designation that did not exist in a prior time period.

Business Taxes - four general kinds of business taxes are income, self-employment, employment, and excise.


Calendar Tax Year - 12 consecutive months beginning January 1 and ending December 31.

Canceled Loan - The annulment or recission of an approved loan prior to disbursement.

Capital - *** Assets less liabilities, representing the ownership interest in a business; *** a stock of accumulated goods, especially at a specified time and in contrast to income received during a specified time period; *** accumulated goods devoted to the produc

Capital Asset - All tangible property, including securities, real estate and other property, held for the long term.

Capital Expenditures - Business spending on additional plant equipment and inventory.

Capital Gain - The profit realized when a capital asset is sold for a higher price than the purchase price. See also capital loss.

Capital Loss - The loss incurred when a capital asset is sold for a lower price than the purchase price. See also capital gain.

Capitalization - The sum of a corporation's long-term debt, stock and surpluses. Syn. invested capital.

Capitalized Property - Personal property of the agency which has an average dollar value of $300.00 or more and a life expectancy of one year or more. Capitalized property shall be depreciated annually over the expected useful life to the agency.

Cash Discount - An incentive offered by the seller to encourage the buyer to pay within a stipulated time. For example, if the terms are 2/10/N 30, the buyer may deduct 2 percent from the amount of the invoice (if paid within 10 days) otherwise, the full amount is due in

Cash Flow - An accounting presentation showing how much of the cash generated by the business remains after both expenses (including interest) and principal repayment on financing are paid. A projected cash flow statement indicates whether the business will have cash

Cash Method - reporting income one receives during the year, usually deducting expenses in the year you pay them.

Certificate Of Competency - A certificate issued by the Small Business Administration (SBA) stating that the holder is "responsible" (in terms of capability, competency, capacity, credit, integrity, perseverance, and tenacity) for the purpose of receiving and performing a specific g

Certified 8(A) Firm - A firm owned and operated by socially and economically disadvantaged individuals and eligible to receive federal contracts under the Small Business Administration's 8(a) Business Development Program.

Character - A letter, digit, or other symbol, that is a part of the organization, control, or representation of data used in computer systems.

Charge-Off - An accounting transaction removing an uncollectible balance from the active receivable accounts.

Charged Off Loan - An uncollectible loan for which the principal and accrued interest were removed from the receivable accounts.

Closed Loan - Any loan for which funds have been disbursed, and all required documentation has been executed, received and reviewed. For statistical purposes, first or total disbursement is counted as a closed loan.

Closing - Actions and procedures required to effect the documentation and disbursement of loan funds after the application has been approved, and the execution of all required documentation and its filing and recordation where required.

Collateral - Something of value -- securities, evidence of deposit or other property -- pledged to support the repayment of an obligation.

Collateral Document - A legal document covering the item(s) pledged as collateral on a loan, i.e., note, mortgages, assignment, etc.

Common Stock - A security that represents ownership in a corporation. Holders of common stock exercise control by electing a board of directors and voting on corporate policy. See also equity; preferred stock.

Compromise - The settlement of a claim resulting from a defaulted loan for less than the full amount due. Compromise settlement is a procedure available for use only in instances where the government cannot collect the full amount due within a reasonable time, by enfo

Consortium - A coalition of organizations, such as banks and corporations, set up to fund ventures requiring large capital resources.

Consumer Price Index (Cpi) - A measure of price changes in consumer goods and services used to identify periods of inflation or deflation.

Contingent Liability - A potential obligation that may be incurred dependent upon the occurrence of a future event. Two examples are: (1) the liability of an endorser or guarantor of a note if the primary borrower fails to pay as agreed and (2) the liability that would be incur

Contract - A mutually binding legal relationship obligating the seller to furnish supplies or services (including construction) and the buyer to pay for them.

Contracting - Purchasing, renting, leasing, or otherwise obtaining supplies or services from nonfederal sources. Contracting includes the description of supplies and services required, the selection and solicitation of sources, the preparation and award of contracts, a

Contracting Officer - A person with the authority to enter into, administer, and/or terminate contracts and make related determinations and findings.

Contractor Team Arrangement - An arrangement in which (a) two or more companies form a partnership or joint venture to act as potential prime contractor; or (b) an agreement by a potential prime contractor with one or more other companies to have them act as its subcontractors under a

Corporation - A group of persons granted a state charter legally recognizing them as a separate entity having its own rights, privileges, and liabilities distinct from those of its members. The process of incorporating should be completed with the state's secretary of

Costs - Money obligated for goods and services received during a given period of time, regardless of when ordered or whether paid for.

Credit Rating - A grade assigned to a business concern to denote the net worth and credit standing to which the concern is entitled in the opinion of the rating agency as a result of its investigation.

Current Assets - Cash and other assets that are expected to be converted into cash within the next twelve months. Examples include such liquid items as cash and equivalents, accounts receivable, inventory and prepaid expenses.


Data Element - The basic unit of identifiable and definable information. A data element occupies the space provided by fields in a record or blocks on a form. It has an identifying name and value or values for expressing a specific fact. For example, a data element name

Debenture - Debt instrument evidencing the holder's right to receive interest and principal installments from the named obligor. Applies to all forms of unsecured, long-term debt evidenced by a certificate of debt.

Debt Capital - Business financing that normally requires periodic interest payments and repayment of the principal within a specified time.

Debt Financing - The provision of long term loans to small business concerns in exchange for debt securities or a note.

Deduction - An item or expenditure subtracted from adjusted gross income to reduce the amount of income subject to tax.

Deed Of Trust - A document under seal which, when delivered, transfers a present interest in property. May be held as collateral.

Defaults - The nonpayment of principal and/or interest on the due date as provided by the terms and conditions of the note.

Defense Acquisition Regulatory Council (Darc) - A group composed of representatives from each Military department, the Defense Logistics Agency, and the National Aeronautics and Space Administration and that is in charge of the Federal Acquisition Regulation (FAR) on a joint basis with the Civilian Age

Defense Contractor - Any person who enters into a contract with the United States for the production of material or for the performance of services for the national defense.

Deferred Loan - Loans whose principal and or interest installments are postponed for a specified period of time.

Depreciation - If property acquired to use in a business has a useful life longer than one tax year, part of it must be deducted in each year, for example, office equipment, buildings, machinery, and equipment.

Disbursement - The actual payout to borrower of loan funds, in whole or part. It may be concurrent with the closing, or follow it.

Disbursing Officer - An employee authorized to pay out cash or issue checks in settlement of vouchers approved by a certifying officer.

Divestiture - Change of ownership and/or control of a business from a majority (non-disadvantaged) to disadvantaged persons.

Dividend - A distribution of the earnings of a corporation. Dividends may be in the form of cash, stock or property. All dividends must be declared by the board of directors. Syn. stock dividend. See also dividend yield.

Due Diligence - The careful investigation by the underwriters that is necessary to ensure that all material information pertinent to an issue has been disclosed to prospective investors.


Eap Counselor - Conducts confidential consultations with troubled employees who so request or who are referred for objective analysis of a personal problem and for identification of the best available assistance and/or professional services needed to resolve the employee

Earning Power - The demonstrated ability of a business to earn a profit, over time, while following good accounting practices. When a business shows a reasonable profit on invested capital after fully maintaining the business property, appropriately compensating its owne

Easement - A right or privilege that a person may have on another's land, as the right of a way or ingress or egress.

Electronic Data Interchange - Transmission of information between computers using highly standardized electronic versions of common business documents.

Emerging Small Business - A small business concern whose size is no greater than 50 percent of the numerical size standard applicable to the Standard Industrial Classification code assigned to a contracting opportunity.

Employee Assistance Program (Eap) Coordinator - Coordinates the activities of Central Office or regional counselors, maintains a community resource list, of available professional assistance to troubled employees and a current roster of EAP counselors for the area of his/her jurisdiction.

Employer Identification Number (EIN) - used to identify the tax accounts of employers, sole proprietors, corporations, partnerships, and other entities.

Employment Taxes - federal income tax withholding, social security and Medicare taxes, and federal unemployment tax.

Enterprise - Aggregation of all establishments owned by a parent company. An enterprise can consist of a single, independent establishment or it can include subsidiaries or other branch establishments under the same ownership and control.

Entrepreneur - One who assumes the financial risk of the initiation, operation and management of a given business or undertaking.

Equity - An accounting term used to describe the net investment of owners or stockholders in a business. Under the accounting equation, equity also represents the result of assets less liabilities.

Equity Financing - The provision of funds for capital or operating expenses in exchange for capital stock, stock purchase warrants and options in the business financed, without any guaranteed return, but with the opportunity to share in the company's profits. Equity financi

Equity Partnership - A limited partnership arrangement for providing start-up and seed capital to businesses.

Escrow Accounts - Funds placed in trust with a third party, by a borrower for a specific purpose and to be delivered to the borrower only upon the fulfillment of certain conditions.

Establishment - A single-location business unit, which may be independent -- called a single- establishment enterprise-- or owned by a parent enterprise.

Estimated Tax - regular, estimated payments on income during the year.

Expenses - costs incurred (other than purchases) to carry on a business.


Fair And Reasonable Price - A price that is fair to both parties, considering the agreed-upon conditions, promised quality, and timeliness of contract performance. "Fair and reasonable" price is subject to statutory and regulatory limitations.

Federal Acquisition Regulation (Far) - The body of regulations which is the primary source of authority governing the government procurement process. The FAR, which is published as Chapter 1 of Title 48 of the Code of Federal Regulations, is prepared, issued, and maintained under the joint aus

Fiduciary - A person legally appointed and authorized to hold assets in trust for another person and manage those assets for the benefit of that person.

Financial Reports - Reports commonly required from applicants request for financial assistance, e.g.: *** Balance Sheet - A report of the status of a firm's assets, liabilities and owner's equity at a given time. *** Income Statement - A report of revenue and expense which s

Financing - New funds provided to a business, by either loans or purchase of debt securities or capital stock.

Fiscal Tax Year - 12 consecutive months ending on the last day of any month other than December, or a 52-53 week year.

Fixed Costs - expenses that do not change regardless of production increases or decreases, for example, rent, insurance, interest on loans, etc.

Flow Chart - A graphical representation for the definition, analysis, or solution of a problem, in which symbols are used to represent operations, data, flow, equipment, etc.

Foreclosure - The act by the mortgagee or trustee upon default, in the payment of interest or principal of a mortgage of enforcing payment of the debt by selling the underlying security.

Franchising - A continuing relationship in which the franchisor provides a licensed privilege to the franchisee to do business, and offers assistance in organizing, training, merchandising, marketing and managing in return for a consideration. Franchising is a form of

Full And Open Competition - With respect to a contract action, "full and open" competition means that all responsible sources are permitted to compete.


Gross Domestic Product (Gdp) - The most comprehensive single measure of aggregate economic output. Represents the market value of the total output of the goods and services produced by a nation's economy.

Gross National Product (Gnp) - A measure of a nation's aggregate economic output. Since 1991 GDP, a slightly different calculation, has replaced GNP as a measure of U.S. economic output.

Gross Receipts - income received from one#s business. Examples of documents that show gross receipts include cash register tapes, bank deposit slips, invoices, receipt books, charge slips, and Form 1099-MISC.

Guaranteed Loan - A loan made and serviced by a lending institution under agreement that a governmental agency will purchase the guaranteed portion if the borrower defaults.


Hardware - A term used to describe the mechanical, electrical and electronic elements of a data processing system.

Hazard Insurance - Insurance required showing lender as loss payee covering certain risks on real and personal property used for securing loans.


Incubator - A facility designed to encourage entrepreneurship and minimize obstacles to new business formation and growth, particularly for high technology firms, by housing a number of fledgling enterprises that share an array of services. These shared services may

Independent And Qualified Public Accountants - Public accountants are independent when neither they nor any of their family have a material, direct or indirect financial interest in the borrower other than as an accountant. They are qualified, unless there is contrary evidence, when they are either (1

Independent Contractor - someone who is self-employed.

Individual Retirement Account (Ira) - A retirement investing tool for employed individuals that allows an annual contribution of 100% of earned income up to a maximum of $2,000. Some or all of the contribution may be deductible from current taxes, depending on the individual's adjusted gross

Industrial Revenue Bond (Irb) - A tax-exempt bond issued by a state or local government agency to finance industrial or commercial projects that serve a public good. The bond usually is not backed by the full faith and credit of the government that issues it, but is repaid solely from t

Innovation - Introduction of a new idea into the marketplace in the form of a new product or service, or an improvement in organization or process.

Insolvency - The inability of a borrower to meet financial obligations as they mature, or having insufficient assets to pay legal debts.

Interest - An amount paid a lender for the use of funds.

Intermediary Organization - Organizations that play a fundamental role in encouraging, promoting, and facilitating business-to-business linkages and mentor-protTgT partnerships. These can include both non-profit and for-profit organizations: chambers of commerce; trade associations;

Inverse Order Of Maturity - When payments are received from borrowers that are larger than the authorized repayment schedules the overpayment is credited to the final installments of the principal which reduces the maturity of the loan and does not affect the original repayment sche

Investment Banking - Businesses specializing in the formation of capital. This is done by outright purchase and sale of securities offered by the issuer, standby underwriting or "best efforts selling."

Invitation For Bids - Formal solicitations for offerings, to perform procurements by competitive bids when the specifications describe the requirements of the government clearly, accurately, and completely; but avoiding unnecessarily restrictive specifications or requirements


Job Description - A written statement listing the elements of a particular job or occupation, e.g., purpose, duties, equipment used, qualifications, training, physical and mental demands, working conditions, etc.

Joint Venture - The cooperation of two or more individuals or enterprises in a specific business enterprise, rather than in a continuing in a partnership.

Journal - a book in which one records each business transaction from supporting documents.

Judgment - Judicial determination of the existence of an indebtedness, or other legal liability.

Judgment By Confession - The act of debtors permitting judgment to be entered against them for a given sum with a statement to that effect, without the institution of legal proceedings.

Junk Bond - A high-yield corporate bond issue with a below-investment rating that became a growing source of corporate funding in the 1980s.


Lease - A contract between the owner (lessor) and the tenant (lessee) stating the conditions under which the tenant may occupy or use the property.

Ledger - a book that contains the totals from all of journals.

Legal Rate Of Interest - The maximum rate of interest fixed by the laws of the various states, which a lender may charge a borrower for the use of money.

Lending Institution - Any institution, including a commercial bank, savings and loan association, commercial finance company, or other lender qualified to participate with SBA in the making of loans.

Leveraged Buy-Out - The purchase of a business, with financing provided largely by borrowed money, often in the form of junk bonds.

Liability - A legal obligation to pay a debt owed. Current liabilities are debts payable within twelve months. Long-term liabilities are debts payable over a period of more than twelve months.

Lien - A charge upon or security interest in real or personal property maintained to ensure the satisfaction of a debt or duty ordinarily arising by operation of law.

Limited Partnership (Lp) - An association of two or more partners formed to conduct a business jointly and in which one or more of the partners is liable only to the extent of the amount of money they have invested. Limited partners do not receive dividends but enjoy direct flow-th

Line-of-credit - A lender agrees to allow a borrower to draw a pre-specified amount from an account on an as needed basis.

Liquidation - The disposal, at maximum prices, of the collateral securing a loan, and the voluntary and enforced collection of the remaining loan balance from the obligators and/or guarantors.

Liquidation Value - The net value realizable in the sale (ordinarily a forced sale) of a business or a particular asset.

Litigation - The practice of taking legal action through the judicial process.

Loan Agreement - Agreement to be executed by borrower, containing pertinent terms, conditions, covenants and restrictions.

Loan Payoff Amount - The total amount of money needed to meet a borrower's obligation on a loan. It is arrived at by accruing gross interest for one day and multiplying this figure by the number of days that exist between the date of the last repayment and the date on which t

Loss Rate - A rate developed by comparing the ratio of total loans charged off to the total loans disbursed from inception of the program to the present date.

Loss Reserve Adjustment Rate - A reserve rate based upon the ratio of the aggregate net chargeoffs (chargeoffs less recoveries) for the most recent five years to the total average loans outstanding for the comparable 5-year period.


Markup - Markup is the difference between invoice cost and selling price. It may be expressed either as a percentage of the selling price or the cost price and is supposed to cover all the costs of doing business plus a profit. Whether markup is based on the selli

Maturity - As applied to securities and commercial paper, the period end date when payment of principal is due.

Maturity Extensions - Extensions of payment beyond the original period established for repayment of a loan.

Mentor - A business, usually large, or other organization that has created a specialized program to advance strategic relationships with small businesses.

Merger - A combination of two or more corporations wherein the dominant unit absorbs the passive ones, the former continuing operation usually under the same name. In a consolidation two units combine and are succeeded by a new corporation, usually with a new titl

Mortgage - An instrument giving legal title to secure the repayment of a loan made by the mortgagee (lender). In legal contemplation there are two types: (1) title theory - operates as a transfer of the legal title of the property to the mortgagee, and (2) lien theo


Negotiated Grievance Procedure - The sole and exclusive procedure available to all employees in a bargaining unit and the employer for processing grievances and disputes.

Negotiation - The "face to face" process used by local unions and the employer to exchange their views on those matters involving personnel policies and practices, or other matters affecting the working conditions of employees in the unit and reduced to a written bindi

Negotiation Dispute - That point in negotiations where labor and management cannot come to an agreement on some or all of the issues on the bargaining table and the services of the FMCS have not been utilized.

Net Profit - result obtained when expenses are subtracted from revenues.

Net Worth - Property owned (assets), minus debts and obligations owed (liabilities), is the owner's equity (net worth).

Notes And Accounts Receivable - A secured or unsecured receivable evidenced by a note or open account arising from activities involving liquidation and disposal of loan collateral.


Obligations - Technically defined as "amount of orders placed, contracts awarded, services received, and similar transactions during a given period which will require payments during the same or a future period."

One-Stop Capital Shops - OSCSs are the SBA's contribution to the Empowerment Zones/Enterprise Communities Program, an interagency initiative that provides resources to economically distressed communities. The shops provide a full range of SBA lending and technical assistance prog

Ordinary Interest - Simple interest based on a year of 360 days, contrasting with exact interest having a base year of 365 days.

Outlays - Net disbursements (cash payments in excess of cash receipts) for administrative expenses and for loans and related costs and expenses (e.g., gross disbursements for loans and expenses minus loan repayments, interest and fee income collected, and reimburse

Owner#s Draw - amount of money taken from the business by the owner.


Partnering - A mutually beneficial business-to-business relationship based on trust and commitment and that enhances the capabilities of both parties.

Partnership - A legal relationship existing between two or more persons contractually associated as joint principals in a business.

Patent - A patent secures to an inventory the exclusive right to make, use and sell an invention for 17 years. Inventors should contact the U.S. Department of Commerce Patent Office.

Petty Cash Fund - fixed fund used to make small payments without having to write a check or use credit. The total of the unspent petty cash and the amount in receipts should equal the fixed amount of the fund.

Prime Contract - A contract awarded directly by the Federal government.

Prime Rate - Interest rate which is charged business borrowers having the highest credit ratings, for short term borrowing.

Principal - amount owed on a loan not including interest.

Pro Forma - financial planning statement that projects future performance.

Pro-Net - An Internet-based database of information of small, disadvantaged, 8(a) and women-owned businesses seeking procurement contracts.

Product Liability - Type of tort or civil liability that applies to product manufacturers and sellers.

Professional And Trade Associations - Non-profit, cooperative and voluntary organizations that are designed to help their members in dealing with problems of mutual interest. In many instances professional and trade associations enter into an agreement with SBA to provide volunteer counseling

Profit-Sharing Plan - An employee benefit plan established and maintained by an employer whereby the employees receive a share of the profits of the business. The money may be paid directly to the employee, deferred until retirement, or a combination of both approaches.

Proprietorship - The most common legal form of business ownership; about 85 percent of all small businesses are proprietorships. The liability of the owner is unlimited in this form of ownership.

Protest - A statement in writing by any bidder or offeror on a particular procurement alleging that another bidder or offeror on such procurement is not a small business concern.

ProtTgT - A firm in a developmental stage that aspires to increasing its capabilities through a mutually beneficial business-to-business relationship.

Purchases - items bought and resold to customers. This includes the cost of all raw materials or parts purchased for manufacture into finished products.


RFP - See Request For Proposals

ROI - See Return on Investment

Ratio - Denotes relationships of items within and between financial statements, e.g., current ratio, quick ratio, inventory turnover ratio and debt/net worth ratios.

Request For Proposals - A document outlining a government agency's requirements and the criteria for the evaluation of offers.

Return On Equity - A measure of a corporation's profitability, specifically its return on assets, calculated by dividing aftertax income by tangible assets.

Return On Investment - The amount of profit (return) based on the amount of resources (funds) used to produce it. Also, the ability of a given investment to earn a return for its use.


SOHO - acronym for Small Office, Home Office.

Secondary Market - Those who purchase an interest in a loan from an original lender, such as banks, institutional investors, insurance companies, credit unions and pension funds.

Self-employment tax - the social security and Medicare tax for individuals who work for themselves (use Schedule SE)

Service Corps Of Retired Executives (Score) - The Service Corps of Retired Executives (SCORE) is a 12,400-member volunteer association sponsored by the SBA. SCORE matches volunteer business-management counselors with present prospective small business owners in need of expert advice.

Small Business - A business smaller than a given size as measured by its employment, business receipts, or business assets.

Small Business Development Centers (Sbdc) - SBDCs offer a broad spectrum of business information and guidance as well as assistance in preparing loan applications.

Small Business Innovative Research (Sbir) Contract - A type of contract designed to foster technological innovation by small businesses with 500 or fewer employees. The SBIR contract program provides for a three-phased approach to research and development projects: technological feasibility and concept deve

Small Disadvantaged Business Concern - A small business concern that is at least 51 percent owned by one or more individuals who are both socially and economically disadvantaged. This can include a publicly owned business that has at least 51 percent of its stock unconditionally owned by one o

Standard Industrial Classification (Sic) Code) - A code representing a category within the Standard Industrial Classification System administered by the Statistical Policy Division of the U.S. Office of Management and Budget. The system was established to classify all industries in the U.S. economy. A t

Standard Mileage Rate - multiplying business miles by the standard mileage rate for the year, to figure car and truck deduction. The standard mileage rate is announced annually by the IRS.

Start-up Costs - expenses incurred before the business opens.

Subcontract - A contract between a prime contractor and a subcontractor to furnish supplies or services for the performance of a prime contract or subcontract.

Supporting Documents - information needed to record in one#s books, generated from business transactions. These include sales slips, paid bills, invoices, receipts, deposit slips, and cancelled checks.


Turnover (Business) - Turnover is the number of times that an average inventory of goods is sold during a fiscal year or some designated period. Care must be taken to ensure that the average inventory and net sales are both reduced to the same denominator; that is, divide inventory at cost into sales at cost or divide inventory at selling price into sales at selling price. Do not mix cost price with selling price. The turnover when accurately computed, is one measure of the efficiency of a business.


Undelivered Orders - The amount of orders for goods and services outstanding for which, the liability has not yet accrued. For practical purposes represents obligations incurred for which goods have not been delivered or services not performed.

Unfair Labor Practice - Action by either the employer or union which violates the provisions of EO 11491 as amended.

Uniform Commercial Code - Codification of uniform laws concerning commercial transactions. In SBA parlance generally refers to a uniform method of recording and enforcing a security interest or charge upon existing or to be acquired personal property.

Usury - Interest which exceeds the legal rate charged to a borrower for the use of money.


Variable Costs - costs that changes as production changes, for example, raw materials, production labor, storage and shipping, etc.

Venture Capital - Money used to support new or unusual commercial undertakings; equity, risk or speculative capital. This funding is provided to new or existing firms that exhibit above-average growth rates, a significant potential for market expansion and the need for add


Wage Reporting - form copies that must be furnished to each employee to whom wages are paid during the year. Form W-2.

Word Processing - Is the efficient and effective production of written communications at the lowest possible cost through the combined use of systems management procedures, automated technology, and accomplished personnel. The equipment used in word processing applications

Workers' Compensation - A state-mandated form of insurance covering workers injured in job- related accidents. In some states the state is the insurer; in other states insurance must be acquired from commercial insurance firms. Insurance rates are based on a number of factors in

Working Capital - money available to a firm for daily operations.


Zoning - local municipalities regulating businesses to operate at particular sites.


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