Business Operations Flashcards
What are the 5 types of business organizations?
- Sole proprietorship
- General or limited partnership
- Corporation
- Limited liability corporation or limited liability partnership
- Joint venture
Sole propietorship
-owned by individual; company can operate under owner’s name or company name
Advantages of a sole proprietorship
- easy to set up
- total mgmt control by owner
- tax benefits expenses/losses can be deducted from company’s gross income
Disadvantages of a sole proprietorship
- owner totally liable for company’s debts/ losses - owner’s personal property and assets can be seized to pay for judgements if company gets sued
- raising capital and credit depends on the owner’s own personal credit rating and assets
- difficult to sell
General partnership
Two or more people share in management, profits, and risks. Income shared among partners, reported on personal taxes. Each partner is personally liable for business debts liabilities
Limited partnership
Sim. To general partnership. Has at least 1 general and 1 limited partner. Limited partners are investors who receive portion of profits but have no say in management of company. Limited partners are only liable to the extent of their investment
Advantages of general or limited partnerships
- easy to form
2. Each partner brings particular talent
Disadvantages to a general or limited partnership
- All partners liable
- income taxed at individual rates
Corporation
Association of individuals that exists as a legal entity apart from its members. To form, formal articles of incorporation must be drawn up by attorney and filed with state office. Financially and legally independent from shareholders
Two types of corporations
C corporation and S corporation
Hierarchy of a corporation
Shareholders
Directors
Officers
Shareholders
Owners of corp. In proportion to the # of shares they own -elect directors
Directors
Act in best interest of shareholders. Responsible for broad policy decisions
Officers
Elected by directors. Carry out day-to-day management
Advantages of corporation
- Shareholders only liable for amount of their investment
- Personal assets not at risk
- Easy to raise capital thru sales of stock
- Taxed at lower rates than individ.
Disadvantages of a corporation
- Corporation and shareholders taxed separately (effectively twice)
- Initial cost to setup and to maintain
S corporation
Usually less than 100 people. Allocate income and losses directly to shareholders in proportion to holdings.taxed @ individual rates
Advantages to S corporation
- Same as C corporation
- Avoids tax on corporate income
Disadvantage to S corporation
- size restrictions
- must be domestic
Who’s liable in a professional corporation?
- The person responsible
Joint venture
Temp, association of two or more people/firms to complete specific project /goal. Usually formed when project is too large for one firm. Dissolved when project is complete.
Teaming agreement
Developed before joint venture. Outlines roles, resp., and contractual relationships that will be established if the proj. Is awarded
In a joint venture, what do taxes depend on?
State law
Limited liability corporation and limited liability partnership
Combine advantages of partnership /sole proprietorship with limited liability of a corporation. Formed like a partnership but possible for non -member to be manager
Advantages of LLC/LLP
- Liability limited to a person’s investment
2. Easier to set up than corporation
Disadvantage to LLC / LLP
- Business not taxed
- Profits / losses passed thru to each member which must be reported on personal Fed. Tax return
- Must pay self-employment tax for ss and Medicare
Standard of care
Legal concept, level of skill and diligence that a reasonably prudent architect would exercise in same community, time frame, given same facts and circumstances
What is AIA doc 201?
General conditions of the contract for construction. Outlines what contractor should do when he/she comes across hazardous or unknown circumstances during construction.
What must happen when a contractor finds hazardous materials or substances as outlined in AIA Doc 201?
- Work must stop immediately
- He must notify architect and owner
- Owner must find entity to verify test material/substance and provide list of entities to architect and contractor
- Architect and/or contractor must respond in writing it any objections
- Once material is rendered harmless, contract sum and time are increased by change order
What must happen when a contractor finds an unknown condition as outlined by AIA Doc 201?
- Must notify architect and owner before condition is disturbed and no later than 14 days after observing
- if contract other than AIA Docs are used the contractor can just notify the architect - Architect should notify owner
- Architect should investigate to see if conditions will increase or decrease contractor’s time req.
- May need to request a consultant
Who is responsible for safety and means and methods of construction on site if hazardous or unknown conditions are found?
Contractor
What are two types of office organization?
- Departmental (flat/horizontal)
2. Studios (vertical/tall)
What are advantages of departmental office organization?
- Efficient
2. Allows standardizing of process / production
What are disadvantages of departmental office organization?
Inflexible, resistant to change, hard for employees to get wide range of experiences
What is advantage of studio office organization?
Close communication among team members and strong project management system
What are the two categories for mandatory continuing education?
- Health, safety and welfare
2. All other categories not related to health, Saturn or welfare
Where are ethical standards outlined?
NCARB model rules of conduct
What are the 5 rules outlined in NCARB model rules of conduct?
- Competence
- Conflict of interest
- Full disclosure
- Compliance with laws
- Signing and sealing documents
What is the main source for ethical standards?
AIA Code of ethics
What are the 3 tiers outlined in the AIA code of ethics?
- Canons (broad principles)
- Ethical standards (specific goals to aspire to)
- Rules of conduct (statements you must follow)
Noncompete or restrictive covenant
Can limit who employee can work for for a specified amount of time after they leave
Employee at will
Employee is not under a contract and com be terminated at any time without explanation. Employee can also quit at any time.
What does a significant portion of the firm’s budget go toward?
Compensation of employees
What type of expense is compensation?
Fixed expense
Employee stock ownership plan (ESOP)
Gives employees partial ownership in firm. Company sets up trust to give employees stock, employees can be vested after a period of time. Generally for larger firms - difficult to set up
What is step 1 in business development?
Creating a marketing plan
What are 5 things a marketing plan should outline?
- Type of work firm wants to do
- Geographic location firm wants to work
- Competition to firm
- How much work firm needs
- Marketing budget
List 9 marketing techniques
- Networking
- Website
- Social media
- Brochures
- Past clients
- PowerPoint presentations
- Newsletter
- Advertising
- Corporate identity
Public relations
Establishes and communicates firms presence to various groups of people on many different levels
What is the most common way to promote firm through PR?
Press release
What are the 6 canons of the code of ethics?
- General obligations
- Obligations to the public
- Obligations to the client
- Obligations to the profession
- Obligations to the colleague
- obligations to the environment
What are 4 ways to classify ethics?
- Character -based ethics
- Contract-based ethics (social)
- Duty-based ethics
- Results-based ethics
What are the typical 2 kinds of terms in a contract?
Express (something explicitly stated) and implied
Of the 2 types of contract terms, which one does standard of care fall under?
Implied terms
What are 6 regulations all employers are expected to comply with?
- Equal Pay Act
- OSHA
- Fair Labor Standards Act (FLSA)
- HIPPA
- American Recovery & Reinvestment Act (ARRA)
- Employee Retirement income Security Act (ERISA)
What are 3 regulations employers with 15+ employees must comply with?
- Civil rights Act, Title VII
- COBRA
- American with Disabilities Act
What’s a regulation employers with 20+ employees must comply with?
Age Discrimination in Employment Act (ADEA)
What’s a regulation an employer with 50+ employees must comply with?
Family Medical Leave Act (FMLA)
