Chapter 29 - Financial Business Skills - Milady Advanced

If a business takes in $1,000 at the end of the day and it cost $600 to deliver the goods and services provided, what is the gross profit?

$1,000

You must fill out Form 1099 for any independent contractor to whom you paid more than _______ during the tax year.

$600

When are quarterly tax payments due?

April 15, June 15, September 15, and January 15

What is used to identify a business that maintains employees?

Employer Identification Number (EIN)

What statement about the federal unemployment tax is correct?

Employers are responsible for paying this tax.

What form is used to report federal estimated tax payments?

Form 1040-ES

What form is used to report the amount of federal, social security, and Medicare taxes withheld and paid for by each employee?

Form 941

What form is used to verify that an employee is eligible to work in the United States?

Form I-9

What form must a person fill out to obtain a social security number?

Form SS-5

What term refers to the standard procedures established by the accounting profession?

Generally Accepted Accounting Principles (GAAP)

When must your federal tax return be filed by if April 15th falls on a Saturday?

Monday, April 17

What term refers to the owner's interest in the assets of the business after all of the liabilities have been deducted?

Net worth

What is NOT a type of insurance generally recommended for salon and spa owners?

Protection and Indemnity

What statement about risk management is correct?

Salons must adhere to all local, state, and federal disinfection guidelines.

How do venture capitalists benefit from loaning money to start a new business?

They are paid a portion of the income from the business.

What statement about independent contractors is correct?

They are responsible for adhering to all laws set forth by their licensing board.

What statement about small-business loans is correct?

To obtain them, you must qualify as a good credit risk

Who should you consult with when developing the plan of action for opening your new business?

accountant

What term refers to anything that a business owns?

assets

What term refers to the point at which all costs are covered and your business begins to earn a profit?

break-even analysis

What is the basic tool that prospective business owners use to help them develop a plan of action and avoid many risk factors?

business plan

What term refers to the amount of money you need to invest in your business?

capital

What type of tax is an important factor in the sale of gift certificates?

deferred income tax

What does payment of the self-employment tax make a sole proprietor eligible for?

disability benefits

What section of your business plan should provide the reader with a complete overview of your entire strategy?

executive summary

What document is commonly referred to as a profit and loss statement?

income statement

What part of your business plan should discuss the methods you will use to develop brand recognition and promote business?

marketing plan

What is typically the biggest expense for a business?

payroll

What is NOT a way in which computers are commonly used in salons and spas?

performing skin analysis sessions online

What are the four Ps?

product, price, promotion, place

What term refers to a legal document that clearly defines the terms of a loan agreement?

promissory note

What is NOT something you should do before you decide to open your own business or purchase an existing one?

revise your marketing strategy

What is the MOST important factor in any business plan?

solid financial management strategy

What is NOT one of the ways in which skin care businesses commonly compensate service providers?

tips

What is NOT one of the three general categories the IRS uses to determine independent contractor status?

type of business