| Term | Definition |
|---|
| Curret Finish Date | current estimate of the point in time when an activity will finisg |
| Current Start Date | current estimate of the point in time when an activity will begin |
| Customer Acceptance | documented signoff by the customer that all project deliverables satisfy requirements |
| Data Date (DD) | the date at which, or uo to which, the project's reporting system has provided actual status and accomplishements. Also called as-of-date. |
| Cost Forecasting | process of predicting future trends and cost throughout the project |
| Cost Management | function required to maintain errective financial contral of the project by evaluating, estimating, budgeting, monitoring, analyzing, forecasting, and reporting cost information. |
| Cost of Quality | cost incurred or expended to ensure quality, including those associated with the cost of conformance and nonconformance |
| Cost Overrun | amount by which actual project cost exceeds estimated cost |
| Cost Performance Index (CPI) | ration of budgeted to actual cost (BCWP/ACWP). Often used to predict the amount of a possible cost overrun or under run usingthe following formula: Commercial Projects CPI = P/A Governemtn Projects CPI + BCWP/ACWP |
| Cost Variance (CV) | (1) difference between the estimated and actual cost of an activity. (2) In earned value, the numerical difference between BCWP and ACWP. |
| Cost-Plus-Award Fee (CPAF) Contract | Cost-reimbursement contract that provides for a fee that consists of (1) a base fee (which may be zero) fixed at inception of the contract and (2) an award fee based on periodic judgemental evaluation by the procurring authority. Used to provide motivation for performance in areas such as quality, timeliness, technical ingenuity, and cost-effective management during the contract. In cost type contracts, the performance risk is borne mostly by the buyer, not the seller. |
| Duration Compression | shortening of the schedule without reducing the project scope. Often requires an increase in the project cost. Also called schedule compression. |
| Early Finish Date (EF) | earliest possible point in time when the uncompleted portions of an activity (or the project) can end based on network logic and any scheduled constraints. May change as the project progresses or as changes are made to the project plan. Used in the critical path method. |
| Early Start Date (ES) | earliest possible point in time when the uncompleted portions of an activity (or the project) can begin, based on network logic and any schedule constraints. May change as the project progresses or as changes are made to the project plan. Used in the critical path method. |
| Errors and Omissions Insurance | protects your company from claims if your client holds you responsible for errors, or the failure of your work to perform as promised in your contract. Coverage includes legal defense costs-no matter how baseless the allegations. Errors and Omissions Insurance will pay for any resulting judgements against you, including court cost, up to the coverage limits on your policy. |
| Critical Path | includes in order all thoses activites that have no Slack Time; delay on any of these activities delays the total project. Thus these critical activities receive the prime attention and activities having slack time are fir in with more comfortable appropriateness. |
| Final Payment | constitutes a waiver of claims by the owner except those arising from unsettled liens and other claims arising out of the contract, failure of the work to comply with the contract documents, and terms of specified warranties. Accepatance of the final payment by the contractor constitutes a waiver of all claims except those that were previously made and that remian unresolved. |
| Certificate of Substantial Completion | the work performed inder this contract has been reviewed and found, to the Construction Manager's and Designer's best knowledge, informaion and belief, to be substantially complete. Substantial completion is the stage in the process of the Work when the Work or designated portion thereof is sufficiently complete in accordance with the Contract Documents so that Owner can occupy or utilize the Work for its intended use. The date of Substantial Completion of the project or portion thereof designated about is hereby established as Certificate of Substantial Completion which is also the ddate of commencement of applicable warranties required by the Contract Documents except as stated specifically below. A list of items to be completed or corrected is attached hereto. The failure to include any items on such list does not alter the responsibility of the Contractor to complete all Work in accordance with the Contract Documents. |
| Building lIne or Setback | refers to the distance from the front, back, or side of a lot beyond which construction or improvements may no extend without permission by the proper governmental authority or other party. The building line may be established by a filed plat of subdivision, by restrictive covenants in deeds, by building codes, or by zoning ordinances. |
| Press releases | focus on publications ideal for your target market. Sending interesting pictures can sometimes help. |
| Technical articles | well written article printed in trad publications |
| Demonstrations, Seminars and Conferences | invite business targets to a demonstration of services and concepts. Effective method of personality eduation prospects and customers about services |
| Pubic relations | Includes press releases, technical articles, demonstrations, seminars, conferences, voluntering, community projects, charity events, open house |
| Business Owners Policy (BOP) | combines property, liability, and business interruption coverage for small to medium sized businesses. Generally cheaper than in purchased through separate insurance policies. |
| Business liability | provided by the business owners. Includes liability for bodily injury, property damage, personal injury, adverstising injury, and fire damage |
| Criteria for withholding payment | defective work, third party claims, evidence that the work is not verified by payment application information, is not completed according to contract documents, cannot be completed with the remaining sum, cannot be completed on time, of others is not being paid, damage to the owner of another contractor |
| Gantt chart (Bar chart) | graphic represnetation of work activities shown by a time-scales bar chart. Time (weeks, days or months) plotted on X-axis. Tasks plotted on Y axis. Bold horizontal lines indicate the period of time the task will be. Visual representation and overview of the project provided are used for small to midsize projects. Does ot show the relationship between activities |
| Responsibilities to the client | Accurately detai lthe scope and nature of the project involved, services to be performed, fees, additional compensated professional services. Shall nor offer services for which they are not qualified, accept any type of compensation from any individaul or business in conjunction to the project, reveal confidential information regarding the client or project. Shall have client's written permission to use project photos or specifications, exhibit intergrity at all times in professional relationships to clients, vendors and other professionals to insure best service possible, be fiscally responsibel in regards to the best interest of the client. |
| Cost baseline | tie-phaes budget used to measure and monior cost performance on the project. Developed by summing estiamted cost by period and usually displayed in the form of an S-curve. |
| Cost budgeting | allocating cost estimates to individual project components |
| Cost Center | subdivision of an activity for which identification of cost is desired and through which costs can be controlled through one responsible manager. |
| Cost Estimating | process of estimating the cost of the resources needed to complete project activities. Includes an economic evaluation, an assessment of project investment cost, and a forecast of future trends and costs. |
| Cost-Plus Fixed Fee (CPFF) Contract | type of contract in which the buyer reimburses the contractor for the contracto's allowable costs (as defined by the contract) plus a fixed amount of profit (fee). THe fixed fee does not vary with actual cost but may be adjusted if changes occur in the work to be performed under the contract. In cost type contracts, the performance risk is borne mostly by the buyer, not the seller. |
| Cost-Plus-Incentive Fee (CPIF) Contract | type of contract in which the buyer reimburses the contractor for the contractor's allowable costs (as defined by the contract) and the seller earns its earns fee (profit) if it meets defined performance or cost citerria. Specifies a target cost, target fee, minimum fee, maximum fee, an fee adjustment formula. |
| Cost-Plus-Percentage-of-Cost (CPPC) Contract | type of contract that provides reimbursements of allowable cost of services performed plus an agreed-upon percentags of the estimated cost as profits. In cost type contracts, the performance risk is borne mostly by the buyer, not the seller. |
| Change Order Authorization | 3 Limitations 1-the change must cause no cost adjustment 2-it must not affect the construction time 3-it must not be inconsistent with the intent of the contract documents |
| Finish-to-start (FS) | relationship in a precedence diagramming method network in which one activity must end before the successor activity can start. The most commonly used relationship in the precedence diagramming method. |
| Firm-fixed-price (FFP) Contract | type of contract in which the buyer pays the contractors a set amount (as determined by the contract) regardless of the contractor's costs. In the fixed-price contracts, the performance risk in borne mostly by th seller, not the buyer. |
| Fixed Cost | cost tht does ot vary with volume of output. |
| Fixed-price incentive (FPI) Contract | type of contract in which the buyer pays the contractor for the actual allowable cost incurred, not to exceed a ceiling price defined in the contract, an the contractor can earn more or less profit depending on its ability to meet defined performance or cost criteria. In fixed-price contacts, the performane risk is borne mostly by the seller, not the buyer. |
| Newtorking | a powerful an indispensible tool for marketing your business. The more you put into your networking efforts th mor you will get out. By exchanging information, idas, contacts an business referrals, you increase your client and referral base. You will also find yourself privvy to information about industry trends, trade associations and key people in particular industries. Trade associations, chamber of commerce, trade fairs and business conferences offer networking opportunities. Join and become active in those groups that best fit your business goals or match your personal interests. |
| Fixed-Price Level of Effort Contract | type of firm-fixed price contrat requiring the contractor to provide a specified level of effort over a stated period of time in work that an be stated only in general terms. |
| Fixed-Price-Contract | type of contract with a firm pricing arrangement established by the parties at the time of contracting. A firm-fixed price contract is not subject to adjustment on the basis of the contractor's cost experience in performingthe contract. Othe types of fixed-price contracts (fixed-price contract with economic price adjustment, fixed-price incentive contract, fixed-price re determination prospective contract, an fixed-price re determination retroactive contract) are subject to prie adjustment on the basi of (1) Economic conditions or (2) The contractor's performance of the contract. |
| Float | amount of time that an activity may be delayed from its early start without delaying the project nd date. Derived by subtracting the early start from th late start or early finish from the late finish, and my change as the project progresses and as changes are made to the project plan. Also called slack, total float, and path float. |
| Variables that effect fees | Complexity of th project, size of the project (one room or whole house), quality of products selected (custom or prefabricated cabinets), timeframe in which the project needs to be completed (two weeks or two months), geogaphical location, expertise of th designer. |
| Word-of-mouth | extremely important and also very powerful promotional tool. Customer talking about you to friends, family and acquaintances have much more influence and credibility than any other kind of advertisement. Bad word of mouth travels an muliplies at least four times faster than good, so make sure your customer service is spot on right from the start. Many small businesses have not only survived (without a huge advertising budget), but grown with good word of mouth working for them. |
| Different types of contour lines | dew point:isodrotherm, economic production:isoquant, elevation:contour lines on a topographic map or isohypse, depth:isobath, humidity:isohume, liquid precipitation amount:isohyet, magnetic declination:isocline, presence of linguistic feature:isogloss, pressure:isobar, solar radiation:isohel, temperature:isotherm, wind direction:isogon, wind speed:isotach |
| Surety | one who has contracted to b responsible for another, especially one who assumes responsibilities or debts in the event of default. |
| Privity | knowledge of something private or secret shared betwen individuals, especially with the implication of approval or consent. |
| Compensation | something, such as money, given or received as payment or reparation, as for a service or loss |
| Quittance | release from a debt, an obligation, or a penalty |
| ANSI | American National Standards Institute |
| ASTM | American Society for Testing and Materials |
| IEEE | Institure of Electrical and Electronics Engineers |
| NFPA | National Fire and Protection Association |
| NSSN | NationalStandards Systems Network |
| OSHA | Occupational Safety and Health Administration |
| AIA | American Institute of Architects |
| CSI | Construction Specifications Institute |
| IFMA | International Facility Management Association |
| ADA | Americans with Disabilites Act, Technical Assistance Program |
| Allowance | a monetary sum or a quantity of a product not otherwise defined by the specifications and drawings, but which the bidder is required to include in the bid |
| Cash Allowance | a monetaty sum the bidder includes as part of the contract sum to cover the cost of certain itmes to be determined at a later time |
| Quantity Allowance | a specified quantity of a product or assembly that the bidder includes in the scope of the work even though the location of the product is not defined on the drawings or in the specfications |
| Alternates | a defined portion of the work that is priced separately and primarily helps to assure an owner that the project can be constructed with available funds |
| Unit Price | cost quoted by a bidder for a single, specified unit of work |
| Direct Selection | the contractor is selected by the owner and the price and payment is negotiated between the owner and contractor |
| Single Prime contract | one main or general contractor |
| Multiple Prime Contract or Fast Track | more than one general contractor |
| Construction Management | either done by the general contractor or a person hired by the owner to oversee and administer the project |
| Project Management | when construction management is extended to coordination of the design and planning stages |
| Design Build | the owner contracts with a single entity not only to build the project but also to design it |
| Contract Payment Bond | guarantees payment of the contractor's obligations under the contract for subcontractors, laborers,and materials suppliers associated with the project. Since liens may not be placed on public jobs, the payment bond may be the only protection for those supplying labor or materials to a public job. |
| Contract Performance Bond | guarantee performance of the terms of a contract. Frequently incorporate payment bond (labor and materials) and maintenance bond liability. Protects the owner from financial loss should the contractor fail to perform the contract in accordance with its terms and conditions |
| Bid Protests | the process by which an unsuccessful supplier may seek remedy for unjust contract awards |
| Bid Time Consideration | evaluation of suppliers' offer with regard to dates identified for completion of phases of the work and/or total work |
| Bid Package | A subdivision of a project into separate workable components, usually consistent with the work breakdown structure, for purposes of inviting tenders from suitably qualified bidders. Typically used by main contractors to parcel out work to specialist subcontractors. |
| Ladder Activity | A type of activity identified in network scheduling. An arrangement in which two or more series of activities progress concurrently but in lockstep because of dependent links between the same rungs of each ladder. |
| Kickback | Any money, fee, comission, credit, gift, gratuity, thing of value, or compensation of any kind which is provided, directly or indirectly, to any individual or contractor for the purpose of improperly obtaining or for rewarding favorable treatment typically in connection with some form of contract. |
| Kick-Off Meeting | Ideally, a workshop type meeting in which the principle stakeholders and participants in the project are breifed on the goals and objectives of the project, how it will be organized, etc. and who are then able to contribute to its planning, assisgnment of responsibilities, target dates, etc. |
| Fast Tracking | Compressing the project schedule by doing some or all of certain activities in parallel that would mormally be done in sequence (such as design and construction). The processof reducing the number of sequential relationships and replacing them typically with parallel relationships. |
| Feasibility Study | THe methods and techniques used to examine technical and cost data to determine the economic potential and the practicality of project appliactions. It involves the use of techniques such as the time value of money so that projects may be evaluated and compared on an equivalent basis. Interest rates, present worth factos, capitalization costs, operating costs, depreciation, etc., are all considered |
| Bid Qualifications | A list of qualifiers that the supplier attached to the submitted bid which is contingent upon these requirements being met. |
| Bid Response | Communications, positive or negative from prospective suppliers in response to the invitation to bid |
| Investment Life-Cycle | The lifetime of a project deliverable from inception to ultimate termination. Often there is uncertainty about the length of time over which a project will be operating and assumptions will have to be made. |
| Invitation to Bid | The invitation issued to prospective suppliers to submit a bid/quotation/proposal for the supply of goods/services |
| Bid Bond | a bond covering a bid |
| Firm Fixed Price Contract (FFP) | A contract where the buyer pays a set amount to the seller regardless of that seller's cost to complete the work. A contractual form in which the price and fee are predetermine and not dependent on cost. |
| Latest Event Time | Latest time by which an event has to occur within the logical and imposed constraints of the network, without affecting the total project duration. |
| Latest Start | The latest day that a work item can start without affecting the final project duration. This assumes that it is completed in its expected time and all subsequent work items start as soon as they are able and are completed in their expected time. |
| Instructions to Bidders | !-Documents 2-Examination of Documents 3-Interpretations During Bidding 4-Substitution of Products 5-Type of Bid 6-Preparation of Bid 7-Requirements for Performance Bond and Payment Bond 8-Subcontractor Listing 9-Identification and Submittal of Bid 10-Modification or Withdrawl of Bid 11-Disqualification of Bidders 12-Applicable Laws 13-Pre-bid Meeting 14-Liquidated Damages 15-Opening of Bids 16-Evaluation and Consideration of Bids 17-Execution of Contract |
| Drawing | graphic and textual information organized on a 2-D surface to convey data about a specific portion of project |
| Record Drawings | are marked up or corrected contract drawings that indicate changes incorporated into the work during construction |
| Symbols | are a graphic representation of an itme or of a material |
| Keynotes | notes that apply only to a particular sheet or drawing. Used when complex information is required or when same note is used in multiple locations |
| General Conditions | are general clauses that establish how the project is to be administered |
| Supplementary Conditions | they modify or are to supplement the general conditions |
| Drawings | are the graphic representation of the work for which the contract is based |
| Addenda | are written or graphic representation of the work for which the contract is based |
| Addenda | are written or graphic document issed to clarify, revise, add to, or delete information in the original bidding documentsor in the previous addenda |
| Modifications | After the construction agreement has been signed, additions to, and deletions from, or modifications of the work to be done are accomplished by change orders |
| Owner Builder | owners serving as their own contractor to build |
| Type of Bids | 1-Stipulated Sum 2-Cost-Plus Fee 3-Guaranteed Maximum Price (GMP) 4-Unit Price 5-Combined Bid |
| Elements of a Bid Form | 1-Project Identification 2-Name and Address of Party to Whom the Bid is Directed 3-Entity Submitting Bid 4-Acknowledgements 5-Amount of Time for the Bids to be Held Open 6-Idenfification of Addenda 7-Prices 8-Alternated 9-Allowances 10-Cash Allowances 11-Quality Allowances 12-Combined Bids 13-Completion Date 14-Liquidated Damages 15-Supplements 16-Closing |
| Bidder | Anyone who has submitted a bid in response to an invitation for bids. A Contractor who responds to a Request for Proposal (or Quotation), ie one who submits a bid. |
| Bidders Conference | A meeting hosted by the buyer contracting organization to assist prospective bidders in understanding the Request for Proposal |
| Bidders List | A list of companies judged capable by the procuring organization from which bids, proposals, or quotations may be solicited. |
| Bid Technical Consideration | Suppliers' technical competency, understanding of the technical requirements and capability to produce technically acceptable goods or services. Generally this evaluation ranks highest among all other evaluation |
| Bid/No Bid Decision | The decision whether or not to submit a proposal in response to a request for proposal |
| Contingency Allowance | Specific provision to cover variations which may occur in the expected values of elements of cost or schedule, but not scope or quality. |
| Cost Reimbursement | A category of contracts based on payments to a contractor for allowable estimated costs, normally requiring only a "best efforts" performance standard form the contractor. Risk for all growth over the estimated value rests with the project owner. |
| Unit Price Contract | A fixed price contract where the supplier agrees to furnish goods/services at unit rated and the final price is dependent on the quantities needed to carry out the work. |
| Special Conditions | A section of a set of contract documents that set out any special requirments for the work, or conditions under which it is to be conducted, and which are specific to the contract at hand. |
| Design Development Phase | The purpose is to focus in the design more of the technical aspects of materials and building systems. Although this phase allows the designer to finalize space and function to a great degree, the primary achievement is to enable the owner to understand how the project will function as well as give more detail about what it will look like. |
| ArCAT Spex | The Architects Catalog |
| CSRF | Construction Sciences Research Foundation |
| First Source | Provides comprehensive building product information to architects |
| NIBS | National Institute of Building Sciences |
| Life Cycle Cost Analysis | A life cycle analysis involves the analysis of the costs of a system or a component over its entire life span. Typical costs for a system may include: Acquisition costs (or design and developmetn costs), Operating costs, Cost of failures, Cost of repairs, Cost for spares, Downtime costs, Loss of production, Disposal costs. |
| Post-occupancy evaluation | Interio designer makes periodic visits to review maintence problems, look for defects covered under warantees, evaluate design decisions, inspect durability of design decisions, determine owner satisfaction |
| Partnership | A business owned bytwo or more people, who agree to share in its profits. Like the sole proprietorship, it is easy to start and the red tape involved is usually minimal. The tax structure is the same as the proprietorship except in the profits and losses of the partnership are divided by an agreed percentage by the partners. The main advantages are that the business can 1-draw on the skills and abilities of each partner 2-offer employees the opportunity to become partners 3-utilizw the partners combined financial resources. However, for your own protection, it is asvisible to have a written partnership agreemeny that will spell out the specifics of the agreement. |
| Metes and Bounds Surveys | A "survey of an irregularly shaped tract of land not conforming to the rectangular systems of surveys." It is a "methos of describing a parcel of land by citing the owners of abutting lands and describing the length of each course of a boundary as 'along' some apparent line, such as 'along a stream.' This kind of survey uses running descriptions with measures of angles and distances. Starting at a Point of Beginning (POB) the description runs counter clockwise or clockwise around the perimeter using directions or bearings and distances, or calls for bounds. The description leads back to the POB and usually includes an area in square feet or acres. A metes and bounds description oftne includes reference to a survey plat. |
| Retainage | a sum retained by the owner from each payment to the contractor. This is to provide some financial cushion to the owner in the event it is needed to correct the contractor's work or if the contracotr defaults and the owner must find other contractos to finish the work of the contract. The retainage is later paid to the contractor after the final submissions have been accepted by the owne. |
| Schematic Design Phase | The primary purpose is to explain the design concept to the owner. Although the design is not yet entirely represented, the schematics can demonstrate basic spaces and relationships. Due to the elemental aspects of this graphic illustration, the designer will need to explain verbally what is not apparent to the owner. This will require paying close attention to the owner's reaction and asking confirming questions. |
| Provision for payment of fees | Monthly through formal application, Completion of certain services or each phase (Based on a % of completed work and unused stored materials minus any fees previously paid), Prearranged payments dates, Provision for late payments. |
| Procedures for protecting the owner | Liquidated damages-money paid by the contractor to the owner for actual anticipated loss the owner will incur if the project is not completed on time. Retainage (holdback)-Certain percentage of the payment that is held by the owner for potentially incomplet or defective work by the contractor. Indemnification-Method used to protect the owner and designeragainst loss or damge dur to the injury as a result of the neglience of the contractor and the contrator's agents. |
| Substantial completion | Point in which the completion of the project is sufficient enough but not completed, so that the owner can occupy or use the site. Can be stated as a specific calendar date. Can be expressed as a number of calendar days form the date of commencement. Terminates contracotrs schedule for the project which allows for bonuses or damages for late completion. Has legal implications as in most cases it begins that statute of limitations of errors possibly caused by the interior design |
| Multiple prime | This system, which many state agencies use, has gained favor in part as another method of "fast-tracking" construction. Work in each construction disciplineis bid sparately. For a given project, there may be numerous bid packages depending on the size, complexity and economic breakdown of the project. These "trade contracts" can be bid as unit-pricing contracts for use on a variety of projets. This fast-track approach appears to be a highly desirable feature of this method of procurement in cases where time of performance is a critical element. The Construction Manage (CM) createsmultiple bid packages from the basic design documents created by the design team. The CM asministers the construction through individual trade contractors contracted directly with the owner. PROS: Economy of scale, time for project delivery is reduced, defined requirements and cost containment CONS: Not suitable for complex or custom projects, can make for administative difficulty, owner liability in hte event one prime trade contractor damages another, lack of a single guaranteed bonded price for th total projet, changes in project scope will generate change orders |
| Project Closeout | Contractor begins processby sending written notification to ID of list of items to be completed or corrected. Contractor completes or corrects list of items. Designer inspects work. Designer determines if work is substantially completed, that stage in the progress of the work when the ID determines that the work is complete and in accordance with the contract documents except for completion of minor items that do not impair the owner from occupying. Designer prepares a punch list to be finished befire Substantial Completion can be established. Contractor completes or corrects punch list. ID makes a final inspection to verify that work is completed or corrected. ID issues a certificateod substantial completion . Contractor submits application for final payment. ID assist owner with move-in, operating manuals, clean-up procedures. ID determines final completion that time when the work is fully completed and in accordance with the contract documents. |
| Basic steps of project closeout | 1-the key to success is to use checklists. When planning the other phases of the project, there is usually some logical sequence to completing the tasks. Most of this disappears during the final 10%. 2-Don't allow anyone to work on any item that is not on the checklist. People will always find something more interesting to work do than close out punch list items. 3-Build your firms intellectual capital through "lessons learned." At the end of each project, collects these lessons learned by the project team and work them into improving the firm's processes. 4-Make every effor to safeguard the project records. If trying to find the back-up calculation for a certain structureis difficult when the project is in the design phase. 5- Don't forget to ask for a referral from your client. Make sure this is routine at the end of every project. 6-Plan your project completion party at the start of the project |
| Basics of a Program Evaluation and Review Technique (PERT chart) | Shows a concise visual representation of project work flow. Shows that a delay of one task does not automatically mean a delay of the entire project. Project management technique for determining how much time a project needs before it is completed. Each activity is assisned a best, worst, and most probable completion time estimate. Estimatesare used to determine the average completion time. Uses a notation technique with a flowchart approach to plotting tasks of the project to show th relations between tasks. Used typically for very large-scale, one-time, complex, non-routine projects. |
| Basics of Sole Proprietorship | business owned by one peson, who is entitle to all of its profits and responsible for all of its debts, is considered a sole proprietorship. This legal form is the simplest, providing maximum control and minimum governemtn interference. Currently used by more than 75% of businesses, it is often the suggested way for a new business that does not carry great personal liability threats. The owner needs to secure the necessary licenses, tax id numbers, and certifications in his or her name, to be in business. The main advantages taht differentiate the sole proprietorship from the other legal forms are the ease with which it can be started, the owner's freedom to make decisions, and the distribution of profits (owner takes all). PROS: Your the boss. It's easy to get started. You keep all profits. Income from business is taxed as personal income. You can discontinue your business at will. CONS:Youe assume unimited liability. The amountof investment capital you can raise is limited. You need to be a generalist. Retaining high-caliber employees is difficult. the life of the business is dependent on the owner's. |
| Basics of Corporation | differs from the other legal forms in that the law regards it as an artificial being posessing the same right and responsibilities as a person.Unlike sole proprietorship or partnerships, it has an existence separate from its owners. It has all the legal rights of an individual in regards to conductng commercial activity-it can sue, be sued, own property, sell property, and sell the rights of ownershipin the form of exchanging stock for money. Benefits of a corporation include 1-limited liability:owners are not personally responsible for the debts of the business 2-the ability to raise capital by selling shares of stock 3-easy transfer of ownership from one individual to another PROS:Stokholders have limited liability, can raise the most investment capital, have unlimited lift, ownership is easily transferable, utilize specialists. CONS:Are taxed twice, must pay capital stock tax, expensive to start, closly regulated by government agencies. |
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