Download Tennessee Business and Law Exam: Key Concepts and Structures and more Exams Law in PDF only on Docsity!
TN Business and Law Exam
Success Factors in Your Business ✔✔organized, consistent approach Factors in Business Failure ✔✔poor planning and inadequate management Entrepreneur ✔✔a person engaged in strategic activities that involve initiation and development of a new business Calculated Risk ✔✔something that is well thought through where all outcomes are considered Rewards of Owning Your Own Business ✔✔own boss, flexible time, freedom and independence, personal satisfaction Challenges of Owning Business ✔✔long hours, manage cash flow, payroll, overwhelming responsibility, finding/keeping employees, taxes, government regulations Business Plan ✔✔a document that outlines business strategies and goals Key Functions of a Business Plan ✔✔planning tool, loan or investor document, benchmarking tool Element of a Business Plan ✔✔cover page, executive summary, company summary, products and services, market analysis, market strategy, financial plan What could be a pitfall to a business plan? ✔✔must portray an accurate picture of business What are the different types of business structures? ✔✔sole proprietorship, partnership, c corporation, s corporation, limited liability company Sole Proprietorship ✔✔a business that has one individual as the owner who is responsible for 100% of the decisions made on behalf of the business and owns all of the business assets Advantages of a Sole Proprietorship ✔✔minimal legal restrictions, simple ownership form, low startup cost, sole owner of profits, freedom in decision making Disadvantages to a Sole Proprietorship ✔✔unlimited liability, less available capital, possible difficulty in obtaining long term financing, dissolution of the business in even of owner death Partnership ✔✔a business relationship between two or more persons who join to carry on a trade or business. each person contributes money, property, labor, or skill, and each partner expects to share in the profits and losses of the business.
Two types of partnership ✔✔general and limited Advantages of a General Partnership ✔✔ease of formation, direct profit rewards, larger management base than that of a sole proprietorship Disadvantages to a General Partnership ✔✔unlimited liability, potential for disagreements, lack of continuity, difficulty in withdrawing from a partnership C Corporation ✔✔a legal business entity that has independent ownership of assets and liabilities from its shareholders Requirements of C Corporation ✔✔board of directors and corporate officers, stockholders as owner of the company, board meetings, board empowered to authorize certain actions Advantages of a C Corporation ✔✔separate legal entity, limited liability for stockholders, unlimited life of the business, availability of capital resources, transfer of ownership though stock Disadvantages to a C Corporation ✔✔complex and expensive organization, limitations on corporations activities and decisions by the corporate charter, extensive record keeping and regulation, double taxation S Corporation ✔✔a legal business entity formed under the rules of Subchapter S of the Internal Revenue Code. It is taxed like a partnership by passing items of income, loss, deduction, and credits through to its shareholders to be included on their separate returns Requirements for S Corporation ✔✔one class of stock, no more than 100 shareholders who are citizens or legal residents of US, filing of IRS Form 2553 Limited Liability Company (LLC) ✔✔a legal business entity that has characteristics of both sole proprietorships and corporations. Federal income taxes are paid only on income distributed to members as ordinary income. Member have protection from liability for actions taken by the company or by other members of your company but are not protected from liability for personal actions. Advantages of a LLC ✔✔limited disclosure of owners, limited documentation, no advance IRS filings, no public disclosure of finances, limited liability for managers and members, ability to delegate management to non members Joint Venture ✔✔generally formed on a project basis in order to integrate positive attributes and resources of to or more companies Purpose of Licensing ✔✔protects the health, safety, and welfare of the public
Documents in Bid Package ✔✔invitation to bid, bid instructions, bid forms, bid schedule, bidder's experience, financial responsibility, and supplements Addendum ✔✔changes made to bid documents after they are issued but before they are due Bid Shopping ✔✔an unethical situation where the general contractor approaches subcontractors other than those who have submitted bids to seek a lower offer than what was quoted in the original bids Bid Peddling ✔✔a unethical situation where the subcontractor approaches the feneral contractor after the project is awarded with the intent of lowering the original price submitted on bid day Bid Rigging ✔✔a form of collusion where contractors coordinate their bids to fix the award outcome of a project Estimate Planning ✔✔the sum of the costs to complete the project and added overhead and profit margin Project Documents ✔✔construction or architectural drawings, specifications, the contract, bonds Estimating Framework ✔✔lists the process for completing the job by defining the phases of the project and listing each task and materials needed for each phase Determining Estimated Costs ✔✔quantity take off method is one of the more accurate estimating methods Quantity Take Off Method ✔✔individually estimate units of materials and labor for each task listed Contract ✔✔legally binding agreement between two or more parties with the main purpose of preventing disputes between parties entering into the agreement Legally Binding Contract Contains ✔✔offer and acceptance, consideration, competent parties, and legal purpose Contract Provisions ✔✔clause or condition in a contract that requires or prevents one or both parties to perform a particular requirement by a specific period of time Supplemental Conditions ✔✔modify the general conditions of the contract Breach of Contract ✔✔occurs when one of the parties involved fails to perform in accordance with any of the terms and conditions of the contract Boilerplate Provisions ✔✔contain standard language designed to protect you in the event of a lawsuit
Material Breach ✔✔a serious violation of a contract that may void the contract and will most likely end up in litigation Immaterial Breach ✔✔less serious violation of a contract that does not result in termination Provisions to Limit Risk ✔✔provisions limit the liability of he contracting parties by addressing allocation of risk What are Recitals? ✔✔language at the beginning of the contract that provides background to the contract (who is entering it and why) Lump Sum Contract ✔✔a contract where the contractor agrees to complete the project for a predetermined specified price. the contractor essentially assumes all of the risk under this contract agreement because the contractor is responsible for additional costs associated with unforeseen circumstances Unit Price Contract ✔✔a type of contract where a price per unit is calculated for each item and the contractor is paid according to the actual quantities used Cost Plus Constract ✔✔a type of contract where the contractor is reimbursed for the actual cost of labor and materials and is paid a markup fee for overhead and profit Single Prime Contracting Method ✔✔traditional form of contracting where the project owner typically hires an architect firm to design project, then performs the work according to the specifics of the project. also responsible for the cost of all materials and labor to obtain project completion Design/Build Contracting Method ✔✔the owner contracts with one company to complete a construction project from start to finish. company awarded the build puts together a team of construction professionals Construction Management (Contracting) ✔✔a type of contracting where the project owner contracts with a professional construction manager to coordinate and manage a construction project Turnkey Construction ✔✔the contractor puts together and manages the construction and design team but also obtain financing and land Fast Track Construction ✔✔a phased approach where the construction process begins before completion of the contract documents. the cost is not fixed until after construction documents are complete and some construction commitments have already been made Multiple Prime Contracts ✔✔owner contracts with two or more contractors to complete same project Partnering ✔✔all parties involved work together to achieve goal
Project Life Cycle ✔✔you must manage each aspect of the project such as customer relations, materials, budget, and sub contractors Tracking the Progress of the Project ✔✔a project manager makes sure that deadlines are met on time. daily reports and status reports are tools you can use to track your progress Budget and Costs Controls ✔✔controlling costs of materials and labor ensure you stay on budget Quality Assurance ✔✔details given, programs like a warranty, and customer feedback ensure this project and future ones are up to standard Value Engineering ✔✔balancing the owner's cost, quality, and time priorities while delivering the highest value product are objectives of the value engineering approach Communication with Customers ✔✔good communication helps you build trust and understand customer expectations Handling Customer Change Orders ✔✔handled carefully and accurately documented Negotiation Basics ✔✔be prepared and get agreement in writing Employees ✔✔should be qualified, motivated, responsible, dependable, open to learning Interviewing and Hiring Emplyees ✔✔should be focused on skills, experience, and qualities Questions you should avoid while interviewing ✔✔age, disabilities, pregnant, marriage, children, religion, sexual orientation, ethinicity New Hire Reporting ✔✔Tennessee has mandatory requirements for reporting new hires Hiring Minors, 14 or 15, for Construction Work ✔✔when school is in session they may not work until 7 am or later than 7 pm and no more than three hours a day/18 hours a week. no work in school hours Hiring Minors, 14 or 15, for Construction Work ✔✔when school is not in session they may not begin work until 7 am or later than 7 pm and no more than eight hours a day/40 hours a week Hiring Minors, 16 or 17, for Construction Work ✔✔work no later than 10 pm on night before a school day unless parent/guardian provides permission then minor can work until midnight three of the nights before school. no work during school hours. no restriction on the number of hours a week. must have 30 min break every six hours of working
Employee Documentation ✔✔files containing Form I-9, IRS Form W-4, State Tax Form, Employment Application, Policy Sign offs, and Emergency contact information throughout employment Form I- 9 ✔✔legal immigration status IRS Form W- 4 ✔✔determine level of federal tax withold State Tax Form ✔✔determine level of state tax withholding - TN does not have a state income tax Key Employment Laws ✔✔several employment laws that you must comply with Fair Labor Standards Act (FLSA) ✔✔a federal law which prescribes standards for the basic minimum wage and overtime pay and affects most private and public employment Immigration and Nationality Act (INA) ✔✔a federal law that outlines the conditions for the temporary and permanent employment of aliens in the United States Americans with Disabilities Act (ADA) ✔✔makes it unlawful to discriminate in employment against a qualified individual with a disability Daris-Bacon Act ✔✔the federal law that requires payment of prevailing wage rates and fringe benefits on federally financed or assisted construction Walsh-Healey Public Contracts Act ✔✔federal law requires payment of minimum wage rates and overtime pay on contracts that provide goods to federal government Contract Work Hours and Safety Standards Act ✔✔federal law that sets overtime that standards for service and construction contracts on federal projects Service Contract Act ✔✔federal act requires payment of prevailing wage rates and fringe benefits on contracts to provide service to federal government Wage Garnishment Law ✔✔federal law that limits the amount an individual's income may be legally garnished and prohibits firing an employee whose pay is garnished for payment of a single debt Employee Polygraph Protection Act ✔✔federal law that prohibits most private employers from using any type of lie detector test Family and Medical Leave Act (FMLA) ✔✔entitles eligible employees to take unpaid leave for specified family and medical reasons Title VII of the Civil Rights Act of 1964 ✔✔Prohibits discrimination in employment decisions on the basis of race, religion, sex, color, or national origin
Safety Equipment ✔✔may be required according to OSHA regulations, depending on the work being preformed Emergency Action Plan ✔✔either a written or an orally communicated plan is required by OSHA Emergency Action Plan must be written if you have how many employees? ✔✔10 or more OSHA Recordkeeping ✔✔needed for 10 or more employees OSHA Form 300 ✔✔injury and illness log OSHA Form 300A ✔✔summary of year before injuries OSHA Form 301 ✔✔individual injury or illness detailed report Material Safety Data Sheet (MSDS) ✔✔information sheets that must be provided by the manufacturer for all hazardous products Underground Utility Safety ✔✔contractors should identify underground utilities before excavating Employee Rights ✔✔can report OSHA violations without the fear of retaliation Overhead Power Line Safety ✔✔considered when formulating a health and safety program and worksite planning Workers should maintain a minimum of how many feet from overhead power lines? ✔✔10 feet Penalties ✔✔vary depending on the severity of OSHA violations Environmental Considerations ✔✔should be considered throughout all phases of construction. obtaining proper permits is important for following environmental regulations U.S. Environmental Protection Agency (EPA) ✔✔works to develop and enforce regulations that implement environmental laws enacted by Congress Tennessee Department of Environment and Consercation ✔✔provides environmental assistance and non regulatory support to prevent and reduce environmental impacts Air Quality ✔✔indoor and outdoor quality should be monitored throughout the construction project Asbestos ✔✔assess whether you may encounter these materials. certain permitting and notification requirements may apply
Clean Water Act ✔✔establishes basic structure for regulating discharges of pollutants into the waters of the United States Sedimentation and Erosion Control Measures ✔✔minimize pollution and contractor costs to rework eroded area and replace lost soil Hazardous and Non Hazardous Waste ✔✔must be disposed of properly Hazardous Substances ✔✔important and proper notification is required Lead ✔✔can cause poisoning and you and employees must follow specific regulations when working with it Sources for Finding the Right Subcontractor ✔✔referrals Creating a Winning Partnership ✔✔establishing good communication and having clear policies in place set a solid foundation for positive subcontractor relationships Site Rules for Contractors ✔✔should be received before starting work and posted on site for everyone to see Employee or Independent Contractor: IRS Guidelines ✔✔uses behavioral control, financial control, and the type of relationship of the parties to make a determination whether someone is an employee or independent contractor Bookkeeping ✔✔the accurate recording of all financial transactions that occur in the business The Accounting Cycle ✔✔a process that happens each reporting period, which starts with recording financial transactions and goes through analyzing financial statements The Accounting Cycle ✔✔classifying and recording transactions, posting transactions, preparing a rial balance, preparing an adjusted trial balance, preparing financial statements, analyzing financial statements Transaction ✔✔event that either increases or decreases account balance soure document ✔✔proof that a transaction took place journals ✔✔daily transactions recorded in a set of books posting ✔✔process of the transferring transactions from journals to accounts account ✔✔register of value
two primary methods of depreciation ✔✔straight line and accelerated straight line depreciation method ✔✔simply take the initial costs of the item and subtract the salvage cost. then you take that total and divide it by the number of "useful life" years accelerated depreciation method ✔✔the asset is depreciated at a higher rate during the early part of its useful life permitting larger tax deductions Modified Accelerated Cost Recovery System (MACRS) ✔✔a depreciation method approved by the IRS that allows for the faster depreciation over longer periods Accounting Process for Materials ✔✔purchase orders help track material inventories and related expenses in the accounting system. invoices should be matched with purchase orders to ensure that the billing is accurate Payroll Accounting ✔✔through records are important for such reasons as calculating tax liabilities and tracking labor costs Technology Solutions for Accounting ✔✔software can automate the process of posting transactions, creating financial statements, invoicing customers, creating purchase orders, and much more Employer Identification Number ✔✔used to identify the tax accounts of employers and certain others who have no employeers Federal Business Taxes ✔✔form of business you operate determines the type of taxes you must pay and how you pay them Sole Proprietor Taxes ✔✔income tax, self employment tax, estimated tax, employment taxes: social security and medicare taxes and income tax withholding, federal unemployment tax, depositing employment taxes, excuse taxes Partnership Taxes ✔✔annual return of income, employment taxes, estimated tax Corporation or S Corporation Taxes ✔✔income tax, estimated tax, employment tax, excise taxes S Corporation Shareholder Taxes ✔✔income tax, estimated tax Income Tax ✔✔tax on earnings self-employment tax ✔✔a social security and medicare tax Form W- 2 ✔✔A summary of your earnings and withholdings for the year for a job
tennessee state business tax ✔✔local counties levy a privilege tax for operating a business in their jurisdictions based on a percentage of sales or gross receipts in succeeding years tennessee state excise tax ✔✔based upon the net earnings of taxable entities conducted within Tennessee. tax rate of 6.5% tennessee sales and use tax ✔✔contractors usually owe this on material cost Contract ✔✔an agreement for improving real property, written or unwritten, express or implied Contract Price ✔✔the amount agreed upon bu the contracting parties for performing all labor and furnishing all materials contemplated by their contract, and shall be increased by the price of "extras" as defined in this section, or diminished by allowances made because of altered specifications or defects in workmanship or materials Contractor ✔✔a person other than a materialman or laborer who enters into a contract with the owner of real property for improving it, or who takes over from a contractor the entire remaining work under such contract Furnish Materials ✔✔supply materials that are incorporated in the improvement; or, specially fabricated materials for incorporation in the improvement; or, supply building material used for the construction and not remaining in the improvement, subject to diminution by the salvage value of such material improvement ✔✔any building, structure, erection, alteration, demolition, excavation, or any part thereof, including ornamental shrubbery and trees, driveways, and private roadways, on real property for its permanent benefit, whether there is existing at the time of such work, any building, structure, or other improvements upon the real property laborer ✔✔any person who, under properly authorized contract, of any degree of remoteness, personally performs on the site of the improvement labor for improving real property lienor ✔✔any person having lien or right of lien upon real property by virtue of this part and includes the person's successor in interest materialman ✔✔any person who, under contract, furnishes material to the owner, contractor, or subcontractor, of any degree, on the site of the improvement or for direct delivery to the site of the improvement, or who specially fabricates materials for the improvement, and who performs no labor in the installation of such improvement owner ✔✔includes the owner in fee of real property, or of less estate therein a lessee for a term of years, a vendee in possession under a contract for the purchase of real property and any person having any right, title, or interest, legal or equitable, in real property, which may be sold under process
Priority ✔✔direct lien holders can gain priority over prior mortgages and vendors' liens by written notice. a mechanic's lien has precedence over all other subsequent liens if the proper process and timeframe for filing is followed Contractor's Band Against Enforcement of Liens ✔✔to provide protection against liens from those who contract with the general contractor, the owner can require he general contractor to post a bond Owner's Misapplication of Loan Proceeds-Felony ✔✔it is a felony if the owner uses loan proceeds for any other purpose than to pay for labor or materials for the designated construction project and this amount remains unpaid Misapplication of Contract Payments-Felony ✔✔it is a felony for a contractor, subcontractors or other person to use contract payments for any other purpose than to pay for labor or materials for the designated construction project and this amount remains unpaid AGC ✔✔Associated General Contractors of America arbitration ✔✔uses a third party judge to render a decision bu which all parties are legally bound. less formal than a trial accounts receivable ✔✔monies that are owed to a business for products and/or services provided AIA ✔✔American Institute of Architects All-Risk Builders' Risk Insurance ✔✔a form of property insurance that covers property owners and builders for buildings under construction typically covering machinery, equipment, materials, supplies, and pictures that are part of the structure o will become part of the structure allowance ✔✔a specified amount designated in an estimate for items that are not specified in the project pans, such as finish materials asset ✔✔items of value owned by a business at-will employment ✔✔employment which can be terminated at will by the employer or employee bad debt ✔✔uncollectible accounts receivable which is deducted from gross income when figuring taxable income balance sheet ✔✔one of the basic accounting financial statements that shows a company's assets, liabilities, and owners' equity bank letter of credit ✔✔a cash guarantee that can be converted to a payment to the owner by a bank or lending institution
bid ✔✔a formal offer to complete a project according to the terms and conditions of the contract for a specified price certificate of occupancy ✔✔a certificate issued by a building inspector that deems a structure meets all applicable codes and is safe for occupancy Certificate of Substantial Completion ✔✔a certificate issued by the architect that deems a structure can be used for intended purposes CFR ✔✔Code of Federal Regulations Company Overhead ✔✔the expenses that are necessary to keep business operations running but not directly associated with a project Cost Plus Contract ✔✔A type of contract in which the contractor is reimbursed for the actual costs of labor and materials and is paid a markup fee for overhead profit current assets ✔✔cash and other assets expected to be exchanged for cash or consumed within a year Current Liabilities ✔✔liabilities due within a short time, usually within a year deprication ✔✔the process of devaluing a fixed asset as a result of aging, wear and tear, or obsolence direct costs ✔✔costs directly linked with a particular project EEOC ✔✔Equal Employment Opportunity Commission Endangered Species Act ✔✔a federal law that protects threatened or endangered species from further harm Fixed Assets ✔✔assets needed to carry on the business of a company, which are not normally consumed in the operation of the business FUTA ✔✔Federal Unemployment Tax Act Health Insurance Portability and Accountability Act (HIPAA) ✔✔a federal law that provides for improved portability and continuity of health insurance coverage connected with employment liquid assets ✔✔assets that can be quickly converted to cash Petty Cash Fund ✔✔a cash fund used to pay relatively small amounts
