Business terminology is similar to a dictionary with the exception that the usage imparts the correct meaning on the word. Business terms generally have more than one meaning and depending on the context, determines the correct definition.

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.

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 decreases.   The differential between sales price and cost changes add to the overall profitability for the company. Economies of …

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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 between two or more parties. This term ‘economic substance doctrine’ has other names including: *Substance over Form Doctrine * 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 …

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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 …

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