Shell 1 - Business Management Flashcards
What are the five areas of “business operations”?
- “business organization” - “office organization” - “ethical standards” - “human resources” - “business development”
What is “business organization”?
“The legal structure of an architectural firm” The type of business entity.
What are the 5 (8) basic types of business organization?
- Sole Proprietorship - General Partnership -or- Limited Partnership - Corporation (C-Corp and S-Corp) - LL Company -or- LL Partnership - Joint Venture
What are the main aspects of a Sole Proprietorship?
- Owned by an individual - Easy to set up (easy to get a business license) - Owner has total control over the company - Business expenses and losses can be deducted from taxable income of the company. - Owner is personally liable for company’s wrong-doing and debts. - All owners assets as at stake when company is sued. - Company’s credit and reputation are tied directly to the individual owner - Hard to sell when you are done running it / die
What are the main aspects of a General Partnership?
- Two or more “general partners” share management, profits, and risks. - Each partner is personally liable for company debts and wrong-doing - Partners usually invest directly in the company - All (“general”) partners have a say in controlling the company (consensus) - Relatively easy to form - Partners are liable for each other’s actions - Profits are taxed individually as income to each partner
What are the main aspects of a Limited Partnership?
- Same as General Partnership, except there is at least one “general partner” and at least one “limited partner” - Limited partners: - - Share in profits - - Invest in the company - - Are only liable to the extent of their investment - - Do not have a say in controlling the company - Also relatively easy to form
What are the main aspects of a C Corporation?
- Exists as a legal entity separate from it’s owners. - Relatively complex and costly to set up and maintain; many regulations - Shareholders own the company in shares and elect the directors - Directors have a fiduciary responsibility to act in the best interest of the Corporation; they make broad decisions; they elect officers. - Officers carry out day-to-day management of the Corporation. - Corp can retain some of it’s profits as income - Shareholders are not liable if the company is sued - Easy to raise capital through stock and through the Corporation’s credit rating - Corporations are taxed at a lower rate, but shareholders are taxed again on their dividends
What are the main aspects of an S Corporation?
- Same aspects as a C-Corp - Shareholders don’t get dividends; profits are distributed directly to shareholders - Corporation does not retain any profits; therefore no tax on corporate profits - Is limited to “small business corporations” - Must be a domestic company with fewer than 100 shareholders
What are the main aspects of a Professional Corporation?
- Similar to a corporation - Different rules in different states - Usually liability is limited to the professional who committed the act
What are the main aspects of a LL Company and a LL Partnership?
- They are the same, but an LLC has one member and an LLP has multiple partners - Easier to set up than a corporation, but more complex to set up than a partnership (more regulations) - Like a corporation, liability is limited (only your investment in the company is at stake) - Not a separate entity, not taxed separately - Members are taxed individually on their share of the profits - Non-members are able to manage the company
What are the main aspects of a Joint Venture?
- A temporary association of two or more people / companies for the purpose of completing a project or specific goal - Usually dissolved after the project / goal is achieved - Should be based on a written agreement defining roles, responsibilities, sharing of profits / losses, and project delivery method - Treated like a partnership; not a separate entity for tax or legal reasons - Usually based on a “teaming agreement” / “memorandum of understanding” that defines the partnership if the project is awarded
What is a Teaming Agreement?
- Also called a “memorandum of understanding” - Drawn up before the project is awarded - Can be used to market the team, while trying to win a project - Not a formal business organization, but is used to define the formal partnership once the project is awarded
What is the Standard of Care”?
- The level of skill and diligence that an architect exercise in the same context (same community, time frame, situation, and set of known facts). - Defines a level of care that an architect must reasonably deliver. - Same time frame refers to the time the decision was made, not the time it was litigated.
What kinds of things constitute raising the Standard of Care?
- Terminology in the contract like “to the highest standards” - Architect promising or guaranteeing certain results to the client - Architect taking responsibility for things that are not in the contract
What are the three components of Office Management?
- Work Organization - Support Staff - Regulations governing the practice of Architecture
What is Department Organization of a firm?
- Staff are organized into departments - Each department specializes in in a different phase or function. - Ex: { marketing ; design ; specifications ; contract documents ; CA } - Project is worked on by each dept’ as needed - Also called Horizontal Organization or Flat Organization
What are the benefits / drawbacks of Department Organization of a firm?
- Overall efficiency - Allows employees to specialize and get very good at one aspect - Promotes standardization and process-refinement - Economies of scale; saves money on labor - Can make a company inflexible - Can make a company resistant to innovation - Inter-departmental communication can be difficult - Employees are less well-rounded
What is Studio Organization of a firm?
- Organized around “Studios”: groups of employees that follow a project from start to finish - Each “Studio” must have within it most of the expertise to complete the project - “Studios” may be formed or dismantled as new projects come in or may persist - Works best with a strong Project Manager role - Sometimes called Vertical Organization or Tall Organization
What are the benefits / drawbacks of Studio Organization of a firm?
- “Studios” can specialize in a type of project (e.g. residential, commercial) - Close communication between team members; possibility of group synergy
What types of Support Staff are there?
- Administrative assistants - Receptionist - Bookeeping / Billing / Finance - Marketing staff - Model builders - IT management
What types of authorization might a company need in order to do business in a jurisdiction:
- Always need a local business license - Corporation: registered in the State in which it practices - Some States require a Certificate of Authorization in order to offer public services - LLC Certificate may be required
What is an SS-4 form? How is it used?
IRS form for “Application for Employer Identification Number”. EIN is used to file payroll taxes.
What is a W-4 form? How is it used?
IRS form for “Employee’s Withholding Allowance Certificate”. Filled out by each employee. A copy must be sent to IRS.
What tax requirements are there on Sole Proprietorships and some Partnerships?
- File State and Federal income tax estimates each quarter. - Pay self-employment tax, to cover SS and Medicare taxes.
What additional taxes might be on company goods and supplies in some States?
- “Use tax” on goods purchased from out-of-State. Basically a sales tax. Must file a “Use Tax Certificate”. - “Personal property tax” on furniture of equipment purchased for the company.
What other taxes might be on a company from the local jurisdiction?
- City income tax - Employment tax - Occupational privilege tax - Use tax - Property tax
What types of government regulations are there for Architectural companies?
- Must obtain a local business license - Might need additional business certificates / ID numbers - File and pay Local, State, and Federal taxes - Maintain a professional license
What are the requirements to maintain a professional license?
Different in every State, but usually includes: - Re-register annually (or biannually) - Continuing education credits - Have passed the NCARB requirements, IDP program, and ARE - May also have to pass additional State professional exams
What standards are there for defining ethics for architects?
- Local and State laws concerning architectural practice - Historical practice ethics - AIA (or other professional association) standards
How does the AIA Code of Ethics and Professional Conduct apply to archiects?
- Technically only applies to AIA members - Can be used to determine reasonable Standard of Care in litigation
What are the six Canons of the AIA Code of Ethics?
- Canon I: General Obligations - Canon II: Obligations to the Public - Canon III: Obligations to the Client - Canon IV: Obligations to the Profession - Canon V: Obligations to Colleagues - Canon VI : Obligations to the Environment
What are the aspects of Canon I of the AIA Code of Ethics?
General Obligations: - maintain and improve own skill - seek to improve architectural design standards - seek to improve society and the environment - exercise learned professional judgement - respect human rights - not discriminate
What are the aspects of Canon II of the AIA Code of Ethics?
Obligations to the Public: - uphold the law - never participate in bribery - never help a client with fraud - promote and serve the public interest - give pro bono services - participate in civil activities - promote public appreciation of architecture
What are the aspects of Canon III of the AIA Code of Ethics?
Obligations to the Client: - serve the client’s best interest - exercise unbiased judgement - don’t except work beyond your ability - avoid conflicts of interest - be truthful in professional communications - keep the client informed on their project - maintain client confidentiality
What are the aspects of Canon IV of the AIA Code of Ethics?
Obligations to the Profession: - uphold the integrity of the profession - be honest and fair - don’t seal documents for which you don’t have responsible control - be honest about your qualifications and work you have completed
What are the aspects of Canon V of the AIA Code of Ethics?
Obligations to Colleagues: - respect the rights of colleagues - acknowledge colleagues’ accomplishments and contributions - provide associates and employees with adequate working conditions - support colleagues through educations, internships, and careers
What are the aspects of Canon VI of the AIA Code of Ethics?
Obligations to the Environment: - be environmentally responsible - promote sustainable design in their own work - advocate sustainable design in other trades - use sustainable practices in your own firm - encourage others to use sustainable practices
What can you NOT ask about in a job interview?
- Age - Date of birth - Marital status - National origin - Race - Maiden name
What Federal laws apply to hiring in firms with 15 or more employees (but should be followed by all firms)?
- Civil Rights Act of 1964 - Equal Opportunity Act of 1972 - Civil Rights Act of 1991 - Americans with Disabilities Act
What traits on which are you not allowed to discriminate when hiring?
- Sex - Race - Color - Religion - National origin - Disabilities
What are the aspects that should be spelled out on an employment contract?
- employee work duties - compensation - benefits - working conditions - termination procedures - policies on moonlighting - may include a non-compete clause
What aspects does the IRS use to define an independent contractor?
behavioral control, financial control, and relationship between worker and employer.
What are the aspects of good management and communication?
- rigorous business plan - rigorous financial plan - clear personnel policies - rigorous management procedures - communicate these things to employees - allow for employee complaints and suggestions
Other than compensation, what benefits can an employer offer?
- Flextime (flexible star and end times) - Office-Sponsored Events - Floating Holidays (optional extensions to common holidays) - Sabbaticals - Flexible Days Off - Compensation Alternatives (paid expenses) - Annual Performance Bonuses - Profit Sharing - Wellness Programs - Company Vehicle - Community Involvement (time off for) - Paid Professional Dues - Office Amenities (creature comforts) - Continuing Education - Extra Family Medical Leave
What are some guidelines for employee evaluations?
- Must be standardized for all employees of same level (unbiased) - As much as possible based on objective and measurable criteria - Performance should be measured more on outcome than on specific actions taken to get there - Give the employee an sense of how they are doing - Give the employee guidelines for improvement - If they are not meeting expectations, give them definite steps for achieving that - More constructive than critical - Use standard forms if possible - More than one reviewer, if possible - Based on consistent actions, not outlier occurrences - Provide written summary, if possible
What are the main aspects of a Quality Control Circle?
- Group of employees who meet to resolve issues related to their work - Ongoing group, not based on a specific need that comes up - Can solve project issues or work on general improvement to the firm
What are three ways of increasing employee participation in the firm?
- Quality Control Group - Study Group - Employee Stock Ownership Plan (ESOP)
What is the National Labor Relations Act about?
Allows employees to organize into unions and protects employee form unfair labor practices.
What is the Equal Pay Act about?
Requires equal pay for employee with the same responsibilities and experience.
What is the Employee Eligibility Verification Act about?
Requires employee to verify employees’ right to work in the US by maintaining the I-9 form for at least 3 years, and 1 year after termination.
What is the Wages and Fair Labor Standards Act (FLSA) about?
Establishes minimum wage, overtime pay, employment recordkeeping, and child labor laws
What is the Occupational Safety and Health Act (OSHA) about?
Requires safe work environments. Requires sanitary offices with first aid kits, MSDS sheets, and fire extinguishers.
What is the Health Insurance Portability and Accountability Act (HIPAA) about?
Protects the privacy of individuals’ health care information
What is the Employee Retirement Income Security Act (ERISA) about?
Set minimum standards for pension plans.
What is the Consolidated Omnibus Budget Reconciliation Act (COBRA) about?
For 20 or more employees. Must continue group health insurance coverage if employment ends (except in case of gross misconduct), working hours change, or employment changes.
What is the Civil Rights Act of 1991 about?
For 15 or more employees. Cannot discriminate based on sex, race, color, religion, or national origin.
What is the Age Discrimination Act of 1967 (ADEA) about?
For 15 or more employees. Cannot discriminate based on age of persons over 40.
What is the Family Medical Leave Act (FMLA) about?
For 50 or more employees. Must give 12 weeks of unpaid leave for child, spouse, or parent care without consequence to employment.
What elements can be part of a firms marketing plan?
- Person-to-person networking - Corporate identity / branding - Brochures - Website - Social media - Standard presentation - Public advertising - Past client recommendations - Public relations (positive public image of the firm): - - Press releases - - Publishing (articles) - - Organize seminars / workshops - - Involvement in local service / politics
