GLOSSARY

Not sure what some business terms mean? Find them at Guayabas Puerto Rico.

Accounts payable (AP)

Bills to be paid as part of the normal course of business.

Accounts receivable (AR)

Debts owed to your company, usually from sales on credit.

Advertising

A product or service may generate additional revenue through advertising if there is benefit from creating additional awareness, communicating differentiating attributes, hidden qualities or benefits.

Business plan

A business plan is a strategic roadmap for any new or growing business or startup venture.

Capital

Money invested into a company or project by its owners.

C corporation

A legal entity that's separate from its owners. Corporations can make a profit, be taxed, and can be held legally liable. Corporations offer the strongest protection to its owners from personal liability, but the cost to form a corporation is higher than other structures.

DBA (doing business as)

a company name, also commonly called a “fictitious business name.”

Economic growth

This is the term used to describe an increase in the amount of goods and services produced by the county, known as gross domestic product (GDP).

Entrepreneur

A person who organizes the means of production to engage in entrepreneurship, often under considerable uncertainty and financial risk. Entrepreneurs may partner with other entrepreneurs to jointly found companies (co-founders), or with an existing organization (e.g., corporate or university spin-outs)

Entrepreneurship

Process by which individuals or a group of individuals (entrepreneurs) exploit a commercial opportunity, either by bringing a new product or process to the market, or by substantially improving an existing good, service, or method of production.

Equity

Equity is used by analysts to work out how financially “healthy” a company is. It also represents what would be left if all of a businesses’ assets were liquidated and the debt paid off.

Ethical trade

Ethical trade can refer to many different things but is most often used as an umbrella term for any business practices that promote socially and/or environmentally responsible trading.

Export

Selling your goods or services overseas.

Fiscal year

Also known as a financial year, the fiscal year is a set period used to calculate financial statements.

Gross

The total amount of money you have earned in a period of time before deductions such as taxes.

Gross Domestic product (GDP)

GDP is the sum of all goods and services produced in the country’s economy. If it is up on the previous three months, the economy is growing. If GDP is down, the economy is contracting.

Import

Buying goods or services from overseas and bringing them into the country.

Income statement

Determines the net income/profit of a business. An annual summary of both income and expenses.

Inflation

The term used when prices rise.

Liability

Debts or money that must be paid. Usually debt on terms of less than five years is called short-term liabilities, and debt for longer than five years is called long-term liabilities.

Liquidity

The ease with which a company’s assets can be converted into cash.

LLC (Limited Liability Company)

LLCs protect you from personal liability in most instances, your personal assets — like your vehicle, house, and savings accounts — won't be at risk in case your LLC faces bankruptcy or lawsuits.

Marketing

Set of planned activities designed to positively influence the perceptions and purchase choices of individuals and organizations.

Net

The amount of profit remaining after deductions such as tax have been made.

Partnership

Structure for two or more people to own a business together. There are two common kinds of partnerships: limited partnerships (LP) and limited liability partnerships (LLP).

Patent

An official legal document confirming that an individual or company has the sole right to make, use or sell a particular invention.

Payroll

Wages, salaries, or employee compensation.

Revenue

Amounts of money received by (or owed to) a company for goods or services provided.

S corporation

Avoid the double taxation drawback of regular C corps. S corps allow profits, and some losses, to be passed through directly to owners' personal income without ever being subject to corporate tax rates.

Seed capital

Investment contributed at a very early stage of a new venture, usually in relatively small amounts.

Sole proprietorship

Sole proprietorships do not produce a separate business entity. This means your business assets and liabilities are not separate from your personal assets and liabilities. A good choice for low-risk businesses and owners who want to test their business idea before forming a more formal business.

Start-up

A business organization that is formed by an entrepreneur or a group of entrepreneurs, which is used to coordinate the process of entrepreneurship under a common ownership structure.

Stock

Privately held or publicly traded shares or securities representing investment in, or partial ownership of, a business.

Sustainability

The use of natural resources with a minimal impact on the environment; e.g. no depletion of resources.

Trademark

A logo, brand name or phrase legally registered by one company to represent them.

Venture capital

Capital invested into projects with higher risks, usually start-up businesses.

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