Terminology

Economies of Scale

Of the basic business principles, economies of scale has the greatest impact on profitability over any other business principle.   As an enterprise’s investment is spread over higher volume the cost per unit of production […]

Terminology

Economic Substance Principle

The Internal Revenue Service uses an economic substance test to identify sham transactions that exist solely to reduce or eliminate taxes.    In addition,  the courts use this same doctrine to rule on the legitimacy of activity […]

Terminology

Business Trusts

The common law definition of a business is an investment of capital or property by individuals which creates the means to carry on towards the goal of generating a profit.   Every state recognizes different legal […]

Terminology

Leverage in Business

In the simple lever and fulcrum machine the force is magnified onto a load.  The machine creates a mechanical advantage, a form of force amplification.  In business the principle is exactly the same.  Except here […]