Category: Terminology
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Winding Up (Going Out of Business)
Winding up is a business phrase referring to the final steps a business entity takes to cease operations, comply with all financial obligations and distribute the final profits to the remaining owners.
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Revenue (Sales) Codes
Revenue (sales) codes are unique identifiers for products sold or services rendered. They are used to organize information so management can better understand customer demands and the company’s profitability related to the items sold.
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Overhead – General Definition
Those costs not directly tied to the production of revenue are referred to as overhead costs.
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Lien – Simple, Business and Legal Definitions
A documented right to property owned by a debtor and granted to a creditor is referred to as a ‘lien’. Although relatively a simple definition, it gets much more complicated when used in various contexts.
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Discounts – Various Meanings in Business
The term ‘discounts’ is a broad and varied meaning word when it comes to use in business. It literally has four distinct definitions. Each definition is used within a certain context of business. The first and most dollar expensive use is with original issue discount related to bonds in the market. The second use and most common is…
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Economic Substance Principle
The taxpayer must prove that the underlying economic transaction was not concocted to avoid or reduce tax liability. In the Gregory Vs. Helvering case, the Supreme Court actually uses the word ‘sham’.
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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 formats to conduct business. The simplest and most common is the sole proprietorship. Other forms include partnerships, limited liability company and of course…
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Profit Shifting in Small Business – Internal Shifting
Profit shifting in business is a term with two different interpretations. The more modern use of profit shifting refers to large multinational U.S. based companies shifting their respective profits to other nations with a friendlier and lower income tax rates. This article is written to explain the older and more traditional meaning of profit shifting specifically as…
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Owner’s Draw in Business
When an owner of a small business operation transfers money from the business bank account to their personal bank account the transaction is commonly referred to as a ‘Draw’. There are other terms but this is the traditional word used. The technical definition is: ‘A transfer of earnings from the business on behalf of the owner…