Read these 21 Basic Business Terms Tips tips to make your life smarter, better, faster and wiser. Each tip is approved by our Editors and created by expert writers so great we call them Gurus. LifeTips is the place to go when you need to know about Small Businesses tips and hundreds of other topics.
A patent is a protective right given by a government organization to the first creator of a unique and brand new invention, usually covering a twenty-year span of exclusivity. Inventors must apply for a patent, which can be a lengthy and costly process, and each patent must be applied for in different countries should the inventor choose to protect the idea in more than one country.
A business opportunity is defined as being an investment made into a potentially profitable venture that is billed as an all-inclusive package. Many states regulate business opportunities, with each state listing different requirements for a legitimate business opportunity to meet, such as:
If you have 20 or more employees, you are subject to a law known as the Consolidated Omnibus Budget Reconciliation Act of 1985, better known as COBRA. COBRA requires employers to offer individuals who would otherwise lose benefit protection the option of continuing to have group health care plan coverage. (From the CCH Business Owner's Toolkit)
The Balance Sheet is a statement of a company's assets, liabilities, and capital at a specific period of time. Assets = Liabilities + Capital. The Balance Sheet is a "snapshot" of a company's financial standing at one point in time. It is used to determine the financial status of a company, what the company's present value is.
The Cost of Goods Sold is the direct cost of all items sold during an accounting period. In a retail type environment, this is usually calculated by taking the inventory held at the beginning of the period, adding inventory purchases, and subtracting the inventory held at the end of the period. In a manufacturing environment, these costs may include all of the supplies used to build the items sold as well as the amount paid to employees who built the items.
The Income Statement, also known as the Profit & Loss Statement (P&L) is the statement of net profit or loss in a specific accounting period. Often run monthly, quarterly, and annually to show net profit or loss for a particular month, quarter, or year. Often compared to prior months, quarters, or years to gauge progress or decline of business. Also used as a guide for budgeting future months, quarters, and years.
Bonding is the process by which an employer can be indemnified for the loss of money or property sustained through dishonest acts of a "bonded" employee. This can cover many types of unlawful acts including embezzlement, forgery, larceny, theft, misappropriation, or other dishonest acts committed by an employee, alone or in collusion with others.
Benefits comprise the second half of the compensation equation (the first half is pay). Most benefits are optional and include such items as medical and life insurance, reimbursement accounts, retirement plans, access to health clubs, profit-sharing programs, and even use of a company vehicle.
Accounting Controls allow a manager or business owner to keep track of and control a company's assets. A major control is the Inventory Control System which essentially tracks inventory levels, increases, and decreases so that a manager can determine what may need to be re-ordered or what is or is not selling well.