Masters ch.29

Balance sheet

A document that provides a financial overview of a business at a given point in time in terms of its assets and liabilities.

Promissory note

A legal document that clearly defines the terms of your loan agreement.

What is NOT part of the IRS's definition of an independent contractor?

A person's fees are set by the salon. According to the IRS, an independent contractor is someone who has their own business card, sets their own fees, controls their own hours, and pays their own taxes.

Venture Capitalists

A private individual (or group of individuals) who invest in business with the goal of gaining a return on their investment or profit.

What type of income is taxable?

All forms of income in a salon are taxable, including salary, commissions, and tips.

Over how long a period of time is cash flow usually calculated?

Cash flow is usually calculated over the course of one year and is assessed in terms of its positive and negative values.

What is NOT a standard component of a business plan?

Debt consolidation plan. A standard business plan includes an executive summary, marketing plan, strategic design and development plan, operations plan, and financial plan.

To verify that their employees are eligible to work in the United States, the employer must use what form?

I-9.

If you are a nonresident or resident alien working in the United States, the IRS will issue you a ____________ to process your tax obligation to the U.S. government?

Individual tax identification number (ITIN).

What term refers to protection against business casualties or the loss of something that the small business owner cannot afford to be without?

Insurance is a policy that provides protection against business casualties.

What term refers to the methods used to safeguard your business against loss or damage?

Risk management refers to the methods used to safeguard your business against loss or damage.

What term refers to the chance of incurring some type of harm, damage, or loss?

Risk refers to the chance of incurring some type of harm, damage, or loss.

What term refers to the chance of incurring some type of harm, damage, or loss?

Risk.

How often are self-employed individuals who expect to owe taxes to the government required to make estimated tax payments?

Self-employed individuals who expect to owe taxes to the government are required to make estimated tax payments four times per year.

Liabilities

The amount of debt or money your business owes to creditors.

What are the three primary sources for raising capital?

The three primary sources for raising capital are your own savings, loans, and investors.

Gross profit

The total amount of money a business takes in from the sale of products and/or services.

T/F According to the IRS, an independent contractor is someone who sets his or her own fees, controls his or her own hours, has his or her own business card, and pays his or her own taxes.

True. According to the IRS, an independent contractor is someone who sets his or her own fees, controls his or her own hours, has his or her own business card, and pays his or her own taxes.

T/F Do not hire a service provider as an independent contractor and then have the person work as an employee at your business.

True. Do not hire a service provider as an independent contractor and then have the person work as an employee at your business.

T/F The use of independent contractors has become standard practice in many spas and salons.

True. The use of independent contractors has become standard practice in many spas and salons.

How often should you revise your business plan?

You should revise your business plan at least every six months to stay abreast of industry trends and your business growth and evolution.

Your individual taxpayer number?

Your social security number.

Used to identify businesses that maintain employees?

Employer identification number.

T/F Business owners that engage service providers as independent contractors do not need to establish a legal contract.

False. Business owners that engage service providers as independent contractors will want to establish a legal contract that outlines in detail the exact terms of the agreement between the two parties.

T/F The IRS uses no general categories to determine independent contractor status.

False. The IRS uses three general categories to determine independent contractor status: behavioral control, financial control, and the relationship between the two parties.

What provides a snapshot or overview of your business at a given point in time?

The balance sheet provides a snapshot or overview of your business at a given point in time and is measured in terms of assets and liabilities.

Net profit

The real income of a business after all of the expenses associated with operation are subtracted.

What part of the business plan should be written LAST?

The executive summary should be written last so that it is an accurate summary of what you have developed.

Who should you work with to develop a business plan?

The expert advice of a small business consultant, accountant, or marketing specialist can be invaluable when developing your business plan.