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- A period
of time, (month, quarter, year), for which a financial statement
- This represents
what a business owes to its suppliers and other creditors at a
given point in time.
- This represents
the amount due to a business by its customers at a given point
- A method
of bookkeeping in which income and expenses are allocated to periods
to which they apply, regardless of when actually received or paid.
For example, when an invoice is rendered, its value is added to
income immediately, even though it has not been paid. (Also see
of financial records and accounting procedures generally conducted
by a CPA or accounting firm or if you're really unlucky, the IRS.
statement showing assets and liabilities at a specific time.
- A third
party obligation promising to pay if a vendor does not fulfill
its valid obligations under a contract. Types of bonds include
LICENSE, PERFORMANCE, BID, INDEMNITY & PAYMENT. (Also see
- The point
at which sales equal total costs.
- An asset
that is purchased for long-term use such as machinery and equipment.
- The simplest
form of accounting in which income is considered earned when received
and expenses are not taken into account until paid.
- "Let the
- Banks that
participate in the SBA's
guaranteed loan program.
- An asset
that can be sold for cash and which has been pledged to a creditor
to secure a future obligation. (For example, if you finance a
car it is the collateral for the loan).
earned on previously accumulated interest plus the original principal.
Most spread sheets can calculate this easily for you but for the
curious, the formula is C = P(1 + r/n)n, where C=compound
amount, P=original principal, r=annual interest rate, n=total
number of periods over which interest is compounded.
- An agreement
between two (or more) parties in which each promises to perform
in some way. Contracts can be complex and should always be reviewed
by an attorney. A contract may not be binding if not correctly
drafted and executed .
- A listing
of an individual or company's history of repaying past loans
and other liabilities.
- This is
financing in which you get a loan from someone or somewhere and
go into debt! You are obligated to repay the money at some predetermined
in the value of equipment over time. Depreciation of equipment
used for business is a tax-deductible expense.
- A shipment
directly from the manufacturer to the end user.
(Data Universal Numbering System)
- A database
maintained by Dun and Bradstreet that is used by the Government
to identify each contractor and their location(s). This number
is required to register with the Central Contractor Register (CCR)
that is used by the government's electronic commerce/electronic
data interchange (EC/EDI) system called FACNET. You can obtain
a DUNS number at no cost by calling Dun and Bradstreet at 800-333-0505.
IDENTIFICATION NUMBER (EIN)
- A number
obtained by a business from the IRS by filing form SS-4. If you
are a sole proprietorship, your EIN is your social security number.
who is willing to assume the responsibility, risk and rewards
of starting and operating a business.
- This involves
"selling" a portion of your company to an outside investor. You
have no obligation to repay the funds. In general, venture capital
firms provide this type of funding.
monetary deposit with an independent third party by agreement
between two parties. The escrow money is released when certain
agreed conditions have been met.
Stock Ownership Plan). A plan where employees have a vested interest
(stock ownership) in the company
- The buying
and selling of invoices or accounts receivables.
- A person
or company entrusted with assets owned by another party (beneficiary),
and responsible for investing the assets until they are turned
over to the beneficiary.
- Any 12-month
period used by a company or government as an accounting period.
- A production
cost which does not vary significantly with the volume of output.
An example would be administrative costs. (Also see VARIABLE COST).
- A franchise
is a form of licensing. The franchiser provides his services through
a series of franchisees. Before investing in any franchise, check
with the International Franchise Association at 1 800 543 1038
to see if the franchise is a member in good standing.
ON BOARD (FOB)
term in which the seller's obligations are fulfilled when the
goods reach a point specified in the contract.
- Time allowed
a debtor in which legal action will not be undertaken by the creditor
when payment is late.
by a third party to repay a loan in the event that the borrower
cannot. A special case is a PERSONAL guarantee in which you personally
guarantee an obligation.
in which the federal government makes an arrangement to indemnify
a lender against part or all of any defaults by those responsible
for repayment of loans.
An example is a small business loan guaranteed by the SBA.
of one party to reimburse another party for losses which have
occurred or which may occur.
in which the responsibilities and hours of one job position are
carried out by two people.
- Legal right
to hold property of another party or to have it sold or applied
in payment of a claim.
- Sale of
the assets of a business to pay off debts.
cost associated with producing one more unit of output.
- The Small
Business Administration defines minorities as those who are "socially
and economically disadvantaged." The U.S. Code of Federal Regulations
(CFR) contains the specific requirements.
(Multi Level Marketing)
marketing (MLM) plans, are a way of selling goods or services
through distributors. These plans promise that if you sign up
as a distributor, you will receive commissions -- for both your
sales of the plan's goods or services and those of other people
you recruit to join the distributors. Be careful of plans that
offer to pay commissions for recruiting new distributors. This
is called "pyramiding" and is illegeal in most states.
(Office of Small and Disadvantaged Business Utilization)
- These offices
offer small business information on procurement opportunities,
guidance on procurement procedures, and identification of both
prime and subcontracting opportunities with the United States
expenses not directly related to a particular good or service
produced. An example would be utilities.
- This is
the Procurement Automated Source System managed by the Small Business
Administration. Registering with this central referral system
of small businesses interested in selling to the government can
bring you business with almost no effort. Registration is free.
Call 1 800 231 7277.
- An agreement
authorizing someone (generally an attorney) to act as your agent.
This agreement may be general (complete authority) or special
- Banks which
have a special written agreement with the SBA which allows them
to make a guaranteed SBA
loan without prior SBA approval.
& LOSS (P & L) STATEMENT
- A listing
of income, expenses, and the resulting net profit or loss. This
is also called an income statement.
- A federal
law that requires federal agencies to pay interest to companies
on bills not paid within 30 days of invoice or completion of work.
(Small Business Centers)
- These 12
GSA centers located throughout the United States can help you
tap the multi-billion-dollar GSA "market" for goods and services.
Contact a center nearest you.
- Small Business
Development Centers are are located throughout the United States
and are administered by the SBA. They provide management assistance
to entrepreneurs and new business owners.
(Small Business Investment Corporation)
- SBICs are
licensed by the SBA as federally funded private venture capital
firms. Money is available to small businesses under a variety
- The Service
Corps of Retired Executives is a volunteer management assistance
program of the SBA. SCORE volunteers provide one-on-one counseling
and workshops and seminars for small businesses. There are hundreds
of SCORE offices throughout the United States.
(Standard Industrial Classification Code)
- A four-digit
number assigned to identify a business based on the type of business
or trade involved. The first two digits correspond to major groups
such as construction and manufacturing, while the last two digits
correspond to subgroups such as constructing homes versus constructing
highways. A business can determine its SIC number by looking it
up in a directory published by the Department of Commerce, or
by checking in the SIC book in the reference section of a local
library. SBA size standards are based on SIC codes.
paid only on the principal of a loan.
- The simpliest
(and most popular) form of business organization. The individual
is personally liable for all debts of the business to the full
extent of his or her property. On the other hand, the owner has
complete control of the business.
bonds provide reimbursement to an individual, company or the government
if a firm fails to complete a contract. SBA guarantees surety
bonds in a program much like SBA's guaranteed loan program.
- A common
form of "investment." This refers to the investment in time owners
make, with no salary, to a new business.
- A brokerage
or bank account whose cash balance is automatically transferred
into an interest-bearing investment, such as a money market fund.
Use sweep accounts to earn interest on surplus cash. At the end
of each business day, a sweep account would transfer excess funds
into an interest-bearing account, earn overnight interest, and
make the funds available the next day.
- TAX NUMBER
- A number
assigned to a business that enables the business to buy wholesale
without paying sales tax on goods and products. Contact your local
court house for additional information.
type in which the tenant pays rent to the landlord and additionally
assumes all costs regarding the operation, taxes and maintenance
of the premises and building.
- Any costs
which change significantly with the level of output. The obvious
example is cost of materials.
- Money used
to support new or unusual undertakings; equity, risk or speculative
investment capital. This funding is provided to new or existing
firms which exhibit potential for above-average growth.