Division 1: Practice Management Flashcards
What is business organization?
The legal structure of an architectural firm
What is office organization?
The way a firm organizes to compete its work
What are ethical standards?
The accepted principles of correct professional conduct
What are human resources?
The practices and legal responsibilities pertaining to employing others
What is business development?
The use of marketing and public relations to increase business
What is a sole proprietorship?
A business type in which the business is owned by an individual
Which business type is the simplest?
Sole proprietorship
What is required to set up a sole proprietorship?
Business name, business location, company stationery, electronic communications systems, business licenses required by the local jurisdiction, and (if employees are hired) compliance with state and local requirements
What are some disadvantages of a sole proprietorship?
The owner is personally liable for the company’s debts and losses, establishing credit depends entirely on the owner’s personal credit rating, and it is difficult to sell even a successful sole proprietorship to others (because its success depends mainly on the personal reputation of the current owner)
What are some advantages of a sole proprietorship?
Ease of setup, total management control by the owner, and possible tax advantages (because business expenses and losses may be deducted from the gross income of the business)
What is a general partnership?
A business type in which two or more people, called general partners, share in the management, profits, and risks of the business
What is a limited partnership?
A business type in which there is at least one general partner (who invests in, manages, and is financially responsible for the business) and at least one limited partner (who invests in the business and receives a portion of its profits, but has no say in its management and is only liable to the extent of their investment)
What are some advantages of a general or limited partnership?
Ease of setup and, usually, collaboration between several people with distinct skills for the business
What are some disadvantages of a general or limited partnership?
The partners are personally liable for the company’s debts and losses and are responsible for each other’s actions
What is a c corporation?
An association of individuals that exists as a legal entity apart from its members
What is required to set up a c corporation?
Formal articles of incorporation drawn up by an attorney and filed with the state office
What are the levels of participants in a c corporation?
Shareholders (who own the corporation in proportion to the number of shares they own), directors (who are elected by the shareholders to have the fiduciary duty to act in the best interest of the shareholders and be responsible for broad policy decisions), and officers (who are elected by the directors to carry out day-to-day management)
What are some advantages of a c corporation?
The legal entity is financially and legally independent from its shareholders, each shareholder is financially liable only for the amount of money they invested, the shareholders’ personal assets are not at risk, the continuity of the legal entity is independent from changes in its participants, and capital can be easily raised through the sale of stock
What are some disadvantages of a c corporation?
The legal entity is taxed separately from its shareholders, high costs to establish the legal entity, and continuing paperwork and formal requirements to maintain the legal entity
What is an s corporation?
An association of individuals that exists as a legal entity apart from its members and allocates its income and losses directly to shareholders in proportion to their holdings
What is required to set up an s corporation?
Formal articles of incorporation drawn up by an attorney and filed with the state office
What are the levels of participants in an s corporation?
Shareholders (who own the corporation in proportion to the number of shares they own), directors (who are elected by the shareholders to have the fiduciary duty to act in the best interest of the shareholders and be responsible for broad policy decisions), and officers (who are elected by the directors to carry out day-to-day management)
What are some advantages of an s corporation?
The legal entity is financially and legally independent from its shareholders, each shareholder is financially liable only for the amount of money they invested, the shareholders’ personal assets are not at risk, the continuity of the legal entity is independent from changes in its participants, capital can be easily raised through the sale of stock, and double taxation is avoided
What are some disadvantages of an s corporation?
High costs to establish the legal entity, continuing paperwork and formal requirements to maintain the legal entity, and classification is limited to small business corporations