Glossary

A small corporation which elects sub-chapter S tax treatment. This tax treatment allows the corporation to avoid federal level taxation. Corporate Profits and Losses are passed through to the shareholders.

A qualified retirement program to which employees make tax-advantaged contributions on a pretax basis.

A tax collected by a retailer against the retail price of a commodity.

An account with a bank, or savings and loan company, that pays interest on money deposited.

A form a taxpayer uses to itemize specific sources of income or expenses that are claimed as deductions.

A life insurance policy for which the insured's employer pays premiums under Internal Revenue Code Section 162.

A credit card guaranteed by a deposit in a savings account, or certificate of deposit (CD), with a credit line usually equal to the deposit. If the cardholder defaults on payments, the issuer may apply the deposit toward the balance owed.

The primary federal regulatory agency for the securities industry. The SEC is responsible for promoting full public disclosure and protecting investors against fraudulent and manipulative practices.

Collateral for a debt. For example, accounts receivable may be pledged as security for a loan. Security is a generic term used to refer to a bond, share certificate or other medium or long-term investment evidencing debt or ownership.

A payment required to secure a personal loan, a rental property or a later purchase.

An individual retirement arrangement that allows a wider choice of investments than an IRA, including stocks, bonds, mutual funds and money market funds.

The Social Security tax imposed on self-employed individuals.

A method of filing a paperless return to the IRS.

A financing technique in which an owner sells property directly to a buyer with no mortgage. The title or deed transfers only after full payment, and any foreclosure results in the property reverting to the seller.

The expenses involved in transferring real estate to a buyer from a seller, also called closing costs. These typically include charges for loan origination, discount points, appraisal, property survey, title search, title insurance, deed filing, credit reports, taxes and legal services. They do not include points or the cost of private mortgage insurance (PMI).

One unit of ownership in a corporation, mutual fund or limited partnership.

Any holder of one or more shares in a corporation. A shareholder usually has evidence that they are a shareholder. This evidence is represented by a stock certificate.

A retirement plan that allows employee pretax contributions and requires employer matching contributions. All contributions are immediately vested, and the plan can be set up as a 401(k) or IRA.

A retirement plan that allows both an employer and an employee to contribute to the employee's IRA on a discretionary basis.

The location or position of a property. For intangible property, such as debt, the situs is considered to be the jurisdiction where the debt obligation was issued.

A federal organization that provides programs and opportunities to promote the growth and success of small businesses.

A prepaid card that can be used to purchase goods, services or admissions. They are often used at hotels, recreational facilities, and other businesses.

Social Security is America's government-run retirement plan. One day, when you're your grandparents' age, you'll get the money back.

The tax that funds the Social Security system. It is paid by both employers and employees.

A business carried on by the owner as an individual. The owner of a sole proprietorship is personally liable for all business debts; thus, personal property could be taken to pay business debts. A sole proprietorship is an unincorporated business wholly owned by one individual.

A contract between employer and employee to share the obligations and benefits of a life insurance policy.

An IRA for a nonworking spouse. It is funded by contributions from the working spouse. The IRS limits the combined amount that married couples may contribute to traditional and spousal IRAs.

An index of 500 of the most widely held common stocks on the New York Stock Exchange (NYSE). It is used as a measure of the overall health of the U.S. stock market.

Some taxpayers choose to take a standard amount instead of itemizing all of their deductions. This is a fixed amount that is generally based on a person's filing status.

There are all kinds of taxes which are used to pay for all sorts of things. Some of our money goes to the federal government, which pays for services like interstate highways, the armed forces, the FBI and a lot more. Your state also needs money for schools, roads and state troopers, to name just a few. At the end of the tax year you will need to send one form to the federal government and another to your state government.

The par value of shares multiplied by the number of shares outstanding. The amount of stated capital may affect the ability to pay dividends.

Summary of an account for a period of time, usually one month, showing invoices, credits and balance due. A statement is provided to a customer by a supplier.

A financial statement showing the impact of operating, financing and investing activities effecting the cash position of the company. Also known as Cash Flow Statement, Statement of Cash Flow, Statement of Operating, Financing and Investing Activities or Statement of Changes in Cash Resources.

See Income Statement

See Balance Sheet.

A financial statement summarizing the changes in retained earnings for a stated period. Also known as Statement of Changes in Capital Accounts or Statement of Changes in Retained Earnings and Reserves.

Capital of a corporation that is divided into portions or shares. Stock refers to an equity or ownership interest in a corporation. There may be several classes of stock in a corporation, each class divided into equal portions or shares. Ownership of shares is demonstrated by stock certificates. See Share.

A document substantiating the legal ownership of shares of stock.

A dividend paid by the issuance of shares of capital stock.

The organized trading of securities in the various market exchanges and the over-the-counter market.

The right to buy shares of capital stock at a stated price on or by a given date. A privilege often extended to executives or employees of a company.

A mechanism for employees to purchase stock in their company.

A distribution of additional shares to each holder of a certain stock in proportion to the shares the individual already owns, with each share's par value reduced to maintain the same total equity. For example, if a stock splits 2-for-1 and you own one share with a $100 par value before the split, you would own two shares with a $50 par value after the split.

A record book which lists the owners of shares of stock in a corporation.

See shareholder.

A mortgage in which the borrowed amount is due at the maturity date.

A corporation controlled by another corporation that owns, directly or indirectly, an interest sufficient to elect a majority of the board of directors. See Parent Company.

A life insurance policy that covers the lives of two people and pays benefits when the second person dies. It is often used by couples to fund estate tax liability.