Common Business Terms You Need to Know

Don’t be bogged down by business and legal terminology. We’re here to help with common terms you’ll encounter when filling out paperwork for your venture.

Credit Agreement : This is a written contract between you and a customer showing an agreement to provide them with products or services before being paid for them. The agreement states how and when the customer will pay for the products and services.

Corporation: (n) a form of organization that provides its owners and shareholders with certain rights and privileges, including protection from personal liability. This is a separate legal entity from the owner(s). 

Equipment Lease : This is a written contract between you and an equipment owner showing an agreement to rent, maintain and insure their equipment for a specific length of time at a specific monthly price.

Fictitious Business (or Doing-Business-As) Name Statement : (n) a document that you must file if you are running a for-profit business in California and are using a name that does not include the last name of the owner(s). If Maria Sanchez operates Sweetheart Bakery, she must file a Fictitious Business Name Statement. If she operates Sanchez Bakery, she does not have to file a Fictitious Business Name Statement.]

Incorporate: (v)  the process of forming a corporation. The corporation may be a business, a non-profit organization, or even a government of a new city or town.

Independent Contractor Agreement : This is a written contract showing that you have hired a company or a person to perform a specific service for a specific length of time. This contract should include payment and general employment agreements. 

Limited Partnership: (n) a form of partnership similar to a general partnership, except that in addition to one or more general partners, there can be more limited partners. These partners are only liable on the business’s debts according to their original investment

Purchase and Sales Agreement : This is a written contract between you and a seller to purchase equipment or their business at a specific price and by a certain date.  

Rental Lease : This is a written contract between you and a property owner showing an agreement to rent, maintain, and insure their property for a specific length of time at a specific monthly price.

Sole Proprietorship : (n) a form of organization that has only one owner and no partners. The owner has responsibility for all all debts. The business is not a separate legal entity from the owner.