Business Terms

A comprehensive dictionary of key terms and definitions for small businesses.

Learn how to decode industry jargon so you can make informed decisions for the success of your small business.

A

A process in which one company buys most or all of the shares of another company in order to gain control.

A company that adapts its strategies and operations to changes in the business environment.

A document or information that has been added or attached to the original documents to detail changes or additions.

A marketing strategy in which a company earns a commission for promoting the products of another company.

An individual authorized to act in business transactions on behalf of another (business or person).

A working style that allows employees to work where, when, and how they want in order to increase productivity and efficiency.

A copyright term indicating that the copyright holder reserves all copyright-related rights.

A formal modification or addition to a document or agreement.

A high-net-worth individual who provides financial support to small businesses or entrepreneurs in exchange for ownership equity.

An obligatory annual meeting of interested shareholders of a company.

A comprehensive report detailing the operations of a business for the previous year.

A limited liability company whose ownership information is not publicly available.

A certificate that verifies the origin of a public document for international use.

A method of resolving a dispute outside of the courts in which the parties refer it to one or more people for a binding decision.

A relationship in which both parties act independently and in their own best interests.

A document required to form a corporation that details the corporation’s primary characteristics.

A document that establishes the existence of an LLC and provides basic information about the new entity.

A financial planning vehicle that protects a person’s assets from creditors.

Using various control systems to operate equipment with little or no human intervention.

B

B Corporations are businesses that have been certified by the nonprofit B Lab for meeting stringent social and environmental performance standards.

Business-to-business (B2B) transactions involve two companies, such as a manufacturer selling to a wholesaler.

Businesses that sell products or services directly to consumers are referred to as business-to-consumer (B2C).

Business-to-government (B2G) transactions involve companies selling goods or services to government agencies.

Barriers to Entry are impediments that make it difficult for new businesses to enter a particular market.

Benefits are non-monetary forms of value provided to employees in exchange for their contributions to the organization.

The Better Business Bureau (BBB) is a private, non-profit organization that offers free business reviews to over 4 million companies.

Blockchain is a database that collects a number of records and stores them in a block (similar to collating them on a single sheet of paper).

A brand is a name, term, design, symbol or any other feature that identifies one seller’s goods or service as distinct from those of other sellers.

The Board Chair is the highest-ranking officer on an organizational board of directors and is in charge of the board’s operations.

A Board of Directors is a group of people who jointly supervise an organization’s activities.

A brochure is a piece of informational paper that can be folded into a template, pamphlet, or leaflet.

A consumer’s commitment to repurchase or continue using a brand is referred to as brand loyalty.

A breach of contract is a legal concept in which one or more parties fail to honor a binding agreement or bargained-for exchange.

Process where one company purchases most or all of another company’s shares to gain control.

A broker is an individual or firm that charges a fee or commission for executing an investor’s buy and sell orders.

The primary operations or registered office of a company are located at the Business Address.

A Business Manager is responsible for overseeing the activities of a company or department and making strategic decisions to ensure profitability.

The official name under which a company conducts business is the Business Name.

A Business Name Checker is a tool for determining the availability of a specific business name in a given jurisdiction.

A Business Plan is a formal written document that contains business goals, methods for achieving them, and a time frame for achieving them.

The legal organization of a business, which can range from sole proprietorship to corporation, is referred to as its business structure.

Business travel is defined as travel undertaken by company employees for the purpose of conducting business on the company’s behalf.

A Buy-Sell Agreement is a legally binding contract used to reallocate a share of a business in the event that an owner leaves or dies.

A Buyer’s Market is a market condition in which lower prices and increased supply favor buyers.

Bylaws are the rules and procedures that govern a company’s operations and management.

C

A process in which one company buys most or all of the shares of another company in order to gain control.

A company that adapts its strategies and operations to changes in the business environment.

A document or information that has been added or attached to the original documents to detail changes or additions.

A marketing strategy in which a company earns a commission for promoting the products of another company.

An individual authorized to act in business transactions on behalf of another (business or person).

A working style that allows employees to work where, when, and how they want in order to increase productivity and efficiency.

A copyright term indicating that the copyright holder reserves all copyright-related rights.

A formal modification or addition to a document or agreement.

A high-net-worth individual who provides financial support to small businesses or entrepreneurs in exchange for ownership equity.

An obligatory annual meeting of interested shareholders of a company.

A comprehensive report detailing the operations of a business for the previous year.

A limited liability company whose ownership information is not publicly available.

A certificate that verifies the origin of a public document for international use.

A certificate that verifies the origin of a public document for international use.

A certificate that verifies the origin of a public document for international use.

A certificate that verifies the origin of a public document for international use.

A certificate that verifies the origin of a public document for international use.

A method of resolving a dispute outside of the courts in which the parties refer it to one or more people for a binding decision.

A relationship in which both parties act independently and in their own best interests.

A document required to form a corporation that details the corporation’s primary characteristics.

A document that establishes the existence of an LLC and provides basic information about the new entity.

A financial planning vehicle that protects a person’s assets from creditors.

A financial planning vehicle that protects a person’s assets from creditors.

A financial planning vehicle that protects a person’s assets from creditors.

A financial planning vehicle that protects a person’s assets from creditors.

A financial planning vehicle that protects a person’s assets from creditors.

A financial planning vehicle that protects a person’s assets from creditors.

A financial planning vehicle that protects a person’s assets from creditors.

A financial planning vehicle that protects a person’s assets from creditors.

A financial planning vehicle that protects a person’s assets from creditors.

Using various control systems to operate equipment with little or no human intervention.

Using various control systems to operate equipment with little or no human intervention.

Using various control systems to operate equipment with little or no human intervention.

Using various control systems to operate equipment with little or no human intervention.

D

In real estate, a Deed of Trust is a legal document that transfers title to the trustee—a third party who is impartial—until a debt is settled.

Direct Mail Marketing is a promotional strategy in which printed advertisements are mailed directly to potential customers.

A director is an elected individual who, along with other directors, oversees a corporation’s or organization’s policies and direction.

The formal process by which a business ceases operations and distributes its assets is known as dissolution.

A company can be formally dissolved, usually after debts have been paid off and assets have been divided.

A corporation may conduct business under a name other than its legal name, known as “Doing Business As” (DBA).

A domain name is a web address that users can use to access a website; it is frequently selected to symbolize a company.

The process through which a foreign corporation becomes a domestic one in another state is referred to as “domestication.”

Downsizing is a strategic reduction in the size of a company, often involving layoffs, to improve efficiency or manage costs.

E

Early adopters are people or organizations who begin utilizing a technology or product as soon as it is made available.

Electronic commerce, or eCommerce for short, is the buying and selling of goods and services via the internet.

For taxation purposes, the IRS assigns a unique number to a business, known as an Employer Identification Number (EIN).

A formal contract outlining the terms and conditions of employment between an employer and employee is called an employment agreement.

The term “entity type” describes a company’s legal form, such as corporation, partnership, or sole proprietorship.

An entrepreneur is a person who launches, plans, and oversees a business while taking on the associated risks and benefits.

A business concept known as the Experience Curve contends that costs per unit can go down as a company increases its output.

F

A Family Limited Partnership is a type of arrangement formed to manage and control family assets or businesses.

FAB refers to product characteristics (Features), their advantages, and how they benefit the consumer.

A fictitious business name, like a DBA, is a name that a company uses but is not its legal name.

The legal obligation of one party to manage assets in the best interest of another is known as fiduciary duty.

The competitive advantage that comes from being the first to market with a good or service is known as the “first mover advantage.”

Form 1023 is an IRS form used by non-profit organizations to apply for federal tax exemption.

Corporations and LLCs can choose to be treated as S corporations for tax purposes by completing IRS Form 2553.

A business entity can choose how it will be classified for federal tax purposes by completing IRS Form 8832.

A freelancer is a self-employed person who takes on short-term contracts while providing services to several clients.

G

A General Corporation is a business entity that allows its shareholders, who own and control it, to have limited liability.

Going public refers to a private company’s initial public offering (IPO), which transforms it into a publicly traded and owned entity.

A Golden Parachute is a provision in an executive’s employment agreement that guarantees a substantial payment in the event the executive quits the company.

When dealing in business, one must act in good faith and without intending to mislead or commit fraud.

In business, goodwill is an intangible asset created when a company is purchased for more than its book value.

A Guarantor is a person or entity who guarantees to fulfill another person’s or entity’s responsibility or repay a debt.

Guerrilla Marketing refers to unconventional marketing strategies that aim to get the most out of limited resources.

H

Harvesting is the reduction or termination of investment in a product, service, or business in business.

A holding company is a company that owns securities for other companies but does not produce goods or services.

Human Resources (HR) is the department in a company that is in charge of all aspects of its workforce.

I

This distinction refers to the difference between an innovative concept (idea) and a viable, marketable proposition (opportunity).

An Incorporated Business is a company that has completed the necessary procedures to become a legal corporation.

Incorporation is the legal process of forming a corporate entity that protects its owners from liability.

An Incorporator is the person or entity in charge of the process of incorporating a business.

An Incorporators Statement is a document that contains the initial decisions made by a corporation’s incorporator(s).

A self-employed individual who provides goods or services under a contract or verbal agreement is known as an independent contractor.

An IPO occurs when a private corporation issues new stock to the general public.

An injunction is a legal order that requires someone or something to stop doing something in order to avoid harm or damage.

In business, innovators are the first companies or individuals to introduce new products or methods.

The term “intrapreneurship” describes the act of being an entrepreneur inside a well-established business.

The Internal Revenue Service (IRS) is the United States government agency in charge of tax collection and law enforcement.

J

A Jurat is a statement on an affidavit that specifies when, where, and in front of whom it was sworn.

L

Labor is the human resources that a company employs in its operations or manufacturing process.

A limited liability company (LLC) combines the limited liability of a corporation with the pass-through taxation of a partnership.

A Limited Liability Partnership (LLP) is a partnership in which some or all of the partners’ liabilities are limited.

One or more general partners and one or more limited partners make up a Limited Partnership (LP).

Personal assets are protected from business debts and obligations by Limited Personal Liability.

Loyalty programs encourage repeat purchases by rewarding frequent customers with rewards.

M

A website is an online collection of pages that serve as the online representation of a company, brand, or other entity.

A website is an online collection of pages that serve as the online representation of a company, brand, or other entity.

A website is an online collection of pages that serve as the online representation of a company, brand, or other entity.

A website is an online collection of pages that serve as the online representation of a company, brand, or other entity.

A website is an online collection of pages that serve as the online representation of a company, brand, or other entity.

A website is an online collection of pages that serve as the online representation of a company, brand, or other entity.

A website is an online collection of pages that serve as the online representation of a company, brand, or other entity.

A website is an online collection of pages that serve as the online representation of a company, brand, or other entity.

A website is an online collection of pages that serve as the online representation of a company, brand, or other entity.

A website is an online collection of pages that serve as the online representation of a company, brand, or other entity.

A website is an online collection of pages that serve as the online representation of a company, brand, or other entity.

A website is an online collection of pages that serve as the online representation of a company, brand, or other entity.

A website is an online collection of pages that serve as the online representation of a company, brand, or other entity.

A website is an online collection of pages that serve as the online representation of a company, brand, or other entity.

A website is an online collection of pages that serve as the online representation of a company, brand, or other entity.

A website is an online collection of pages that serve as the online representation of a company, brand, or other entity.

N

The process of legally registering a company’s trade name is known as name registration.

The act of reserving a company name prior to its formation is known as name reservation.

Newsletter Subscriptions are opt-in services in which businesses send regular email updates to subscribers.

A Notice of Litigation is a written notification that a lawsuit has been filed involving the recipient’s legal rights.

O

An LLC’s operating procedures and governance are described in its operating agreement.

Monitoring and managing a company’s operational activities is what Operations Control entails.

An Operations Plan is a plan that describes how a company’s regular operations will be carried out.

Outsourcing is the process of hiring individuals or organizations from outside the company to handle specific business tasks.

P

A process in which one company buys most or all of the shares of another company in order to gain control.

A company that adapts its strategies and operations to changes in the business environment.

A document or information that has been added or attached to the original documents to detail changes or additions.

A financial planning vehicle that protects a person’s assets from creditors.

A financial planning vehicle that protects a person’s assets from creditors.

A financial planning vehicle that protects a person’s assets from creditors.

A financial planning vehicle that protects a person’s assets from creditors.

A financial planning vehicle that protects a person’s assets from creditors.

A financial planning vehicle that protects a person’s assets from creditors.

A financial planning vehicle that protects a person’s assets from creditors.

A financial planning vehicle that protects a person’s assets from creditors.

A financial planning vehicle that protects a person’s assets from creditors.

A financial planning vehicle that protects a person’s assets from creditors.

A financial planning vehicle that protects a person’s assets from creditors.

A financial planning vehicle that protects a person’s assets from creditors.

A financial planning vehicle that protects a person’s assets from creditors.

A financial planning vehicle that protects a person’s assets from creditors.

A financial planning vehicle that protects a person’s assets from creditors.

A financial planning vehicle that protects a person’s assets from creditors.

A financial planning vehicle that protects a person’s assets from creditors.

Q

A quorum is the bare minimum of members required to make decisions at a meeting.

R

A receiver is a person designated to hold property belonging to an individual or business, typically in situations involving bankruptcy or insolvency.

An industry or business that is recession-proof is one that is not significantly impacted by a weak economy.

On behalf of a business, a Registered Agent accepts service of process and other legal documents.

Regulations are rules established by the government or another authority to control how something is done.

After a corporation has been administratively dissolved, these articles have been reinstated.

Reinstatement is the process of bringing a corporation back to life after an administrative dissolution.

A formal decision made by the board of directors or shareholders of a company is called a resolution.

Respondeat Superior is a legal doctrine that holds an employer liable for an employee’s actions while on the job.

Rights of First Refusal give stakeholders the first opportunity to purchase a stake before the owner sells to someone else.

S

A S Corp is a business that chooses, for federal tax purposes, to pass through corporate income, losses, deductions, and credits to its shareholders.

The IRS form known as the S Election is submitted by corporations wishing to be classified as S Corps.

An official in the state government who deals with business filings is the Secretary of State.

SCORE is a non-profit organization that provides education and mentorship to small businesses.

A Series LLC allows the separation of assets, obligations, and operations within the LLC into independent series.

The procedure of notifying an appropriate party of legal action is known as service of process.

An ownership stake in a company or other financial asset is represented by a share.

A shareholder agreement is a written contract that outlines the rights and responsibilities of the shareholders of a corporation.

A Single-Member LLC is a limited liability company with only one owner.

Small businesses can receive assistance from the Small Business Administration in the form of loans and guidance.

The Small Business Administration has granted a privately held investment company called SBIC a license to finance small businesses.

The sole proprietor of a company that isn’t registered as an LLC or incorporated is known as a sole proprietor.

A Statement of Information updates or confirms a business entity’s data records with the state.

Statutes are written laws that have been passed by legislative bodies.

Like a Registered Agent, a Statutory Agent accepts official government communications and process on behalf of a business.

Customers that use a subscription business model pay a regular fee to access goods or services.

A company under the control of a parent or holding company is called a subsidiary.

A strategic planning tool called a SWOT analysis evaluates an organization’s opportunities, threats, weaknesses, and strengths.

T

When an acquiring company makes a bid to gain control of a target company, this is referred to as a takeover.

A Target Market is a specific group of customers to whom a company’s products and services are marketed.

A tort is a civil wrong that causes someone harm, for which the victim may sue the wrongdoer.

A Treasurer is an officer in charge of an organization’s financial affairs and investments.

U

An underwriter assesses and takes on the risk of a third party in exchange for payment in the form of interest, commission, premium, or spread.

V

The process of determining the current worth of an asset, company, or property is known as valuation.

Start-up businesses with a high potential for growth are eligible for venture capital, which is a type of financing.

The voluntary dissolution of a business is the result of an owner-initiated closure.

Voting rights refer to the ability of shareholders to cast ballots on issues pertaining to corporate policy and the makeup of the board of directors.

W

A website is an online collection of pages that serve as the online representation of a company, brand, or other entity.

A wholesaler is a middleman in the supply chain that purchases in large quantities and sells to resellers as opposed to end users.

The process of selling all of a company’s assets, paying off creditors, and distributing any remaining assets to partners or shareholders is known as winding up.