Business words

Basic words with simple explanations By Mary Adorjan

Basic words on our list

enterprise entrepreneur sole-trader partnership liability limited liability company (Ltd., LLC) private limited company public limited company shares shareholders stock-exchange start-up investor investment loan/ credit interest costs of production revenues income capital pricing policy competitors demand and supply tax levied by the government (to levy) income tax corporate tax VAT (value added tax) property tax tariff=duty profit off-shore company go bankrupt

Type of businesses
A business is also called an enterprise. The owner is called an entrepreneur.(check pronunciation) A sole-trader owns and manages a business alone. It is easy to start but the owner is personally responsible for any debts (pron ) or damages. He has to understand everything about his business, from production to accounting, which is very difficult.
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Partnership
If you want to share management responsibilities with others, you can start a partnership. If there is a legal action against the partnership and you lose, you will have to pay for the damages and you might lose your house or car. This is called unlimited liability.

Limited liability company

A business can also be formed as a limited liability company (LLC or LTD). This means that if the business owes money or faces a lawsuit, only the assets of the business itself are at risk. Creditors usually can't reach the personal assets of the LLC owners, such as a house or car. The people who invest in the company buy shares. If you buy shares, you can be an owner, called a shareholder. The money you give is called capital. A private limited company gives shares only to a group of people. (PTE LTD) Shares of a public limited company (PLC or public corporation) can be bought by anyone on the stock exchange.
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Revenues, expenses and profits

Revenue (=income) is the money generated by a business from selling goods ( =products) or services. Expenses are the costs of selling those goods or services (e.g. rent, electricity, and employee salaries). Profit is normally described as the difference between the business revenues and expenses. Revenue is different from profit!
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Supply and demand

graph taken from http://en.wikipedia.org/wiki/Economic_surplus

Pricing policy = the plan of a business about prices You have to know the prices of your competitors (=the businesses that sell the same thing). If demand is high for a product, it means that a lot of people want to buy it. You can sell your product for a high price. Supply = the amount of products or services on the market If you have too many products and customers dont really want to buy them, you have to sell them for a lower price because there is no demand for them. Surplus: 1. an amount that is extra or more than needed, opposite = shortage 2. the amount received greater than spent: a trade surplus of 400 million

Taxes
If you earn some money, you have to pay personal income tax. If your company earns profits, it has to pay corporate tax. You pay VAT (value added tax) for commercial transactions (when you buy something). The government might also levy property tax on rich people. A tariff or duty is paid if a product goes from one country to another country. An off-shore company has its center in a country where taxes are very low.
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Start-ups
A start-up is a newly formed business. If you want to start a business you can ask for money from your family or friends. You can also find investors, who will give money to the company. They might want shares of the company for their money. Banks give loans (credits), which you have to pay back with interest. (e.g. You get $10,000 and you have to pay back $10,000 + 14% more). A mortgage loan is a loan which is given to you if you use your house as a guarantee.
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Homework: Your business plan please send it to my email

What is your business idea? (sell a product or offer a service?) Will you do it as a sole-trader, partnership or perhaps a PLC? Why? Location center of town, countryside, near the sea? Why? How will you get money to start? How will the world find out about you? (advertising) What will your expenses be? Will revenues come slowly but regularly or a big amount once a year? How will you price your product or service? Be careful not to go bankrupt!
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How to start a business in different countries?

Look at the site: www.doingbusin ess.org/rankings And click on the country you want to start your business in. Example:
Lets see the US. (Click)

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Starting a business in the US

Click on Starting a Business.

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Starting a business in the US

You can see the 6 steps, time & cost of starting a business.

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More useful reading Starting a small business in Great Britain

Starting a small business in Great Britain http://www.b usinesslink.go v.uk/bdotg/ac tion/layer?r.s= tl&topicId=10 73858805
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More sites
Starting a business in Kenya: http://kenya.thebeehive.org/en/content/372/ 1354 Try different dictionaries for business words: http://www.businessdictionary.com/definition /revenue.html http://www.macmillandictionary.com End of slides!!
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