bclaws.gov.bc.ca<\/a><\/li>\n<\/ul>\nGlossary of Key Terms<\/h2>\n
Accounts Receivable<\/strong> \u2014 Money owed to your business by customers who have received services but have not yet paid.<\/p>\nBalance Sheet<\/strong> \u2014 A financial statement showing what a business owns (assets), what it owes (liabilities), and the owner’s equity at a specific point in time.<\/p>\nBonding<\/strong> \u2014 A financial guarantee that protects a customer if a contractor fails to complete work or meet contractual obligations.<\/p>\nBreak-Even Point<\/strong> \u2014 The level of revenue at which total income equals total expenses. Below this point the business loses money; above it, the business earns a profit.<\/p>\nBuilders Lien<\/strong> \u2014 A legal claim filed against a property by a contractor, subcontractor, or supplier who has not been paid for work or materials provided.<\/p>\nCash Flow<\/strong> \u2014 The movement of money into and out of a business over a given period. Positive cash flow means more money is coming in than going out.<\/p>\nChange Order<\/strong> \u2014 A written agreement to modify the original scope, cost, or timeline of a project after work has begun.<\/p>\nCorporation<\/strong> \u2014 A legal business structure that creates a separate legal entity from its owners, providing limited liability protection.<\/p>\nCost of Goods Sold (COGS)<\/strong> \u2014 The direct costs of delivering a service or completing a project, including labour and materials.<\/p>\nDue Diligence<\/strong> \u2014 The reasonable steps an employer takes to prevent workplace incidents and ensure compliance with safety regulations.<\/p>\nEstimate<\/strong> \u2014 A detailed calculation of the expected cost to complete a project, including materials, labour, overhead, and profit.<\/p>\nFixed Price (Lump Sum)<\/strong> \u2014 A pricing model where the contractor quotes a single total price for the entire project before work begins.<\/p>\nGross Profit<\/strong> \u2014 Revenue minus cost of goods sold. The amount remaining before operating expenses are subtracted.<\/p>\nGST (Goods and Services Tax)<\/strong> \u2014 A federal tax of 5% applied to most goods and services in Canada. Businesses earning over $30,000 annually must register and collect GST.<\/p>\nHoldback<\/strong> \u2014 A percentage of payment (typically 10% in BC) that a property owner or general contractor is legally required to hold back from each progress payment under the Builders Lien Act.<\/p>\nIncome Statement<\/strong> \u2014 A financial statement showing revenue, expenses, and profit or loss over a specific period.<\/p>\nInput Tax Credit (ITC)<\/strong> \u2014 A credit that allows GST-registered businesses to recover the GST paid on business purchases and expenses.<\/p>\nMarkup<\/strong> \u2014 The amount added to the cost of a product or service to cover overhead and generate profit, usually expressed as a percentage of cost.<\/p>\nNet Income<\/strong> \u2014 The final profit after all expenses, including operating costs, taxes, and interest, have been subtracted from revenue.<\/p>\nOperating Expenses<\/strong> \u2014 The ongoing costs of running a business that are not directly tied to a specific project, such as rent, insurance, phone, and vehicle payments.<\/p>\nPartnership<\/strong> \u2014 A business structure in which two or more individuals share ownership, responsibilities, and profits.<\/p>\nPESTEL Analysis<\/strong> \u2014 A framework for analyzing the external business environment: Political, Economic, Social, Technological, Environmental, and Legal factors.<\/p>\nPorter’s Five Forces<\/strong> \u2014 A framework for analyzing competitive pressures in an industry: rivalry, supplier power, buyer power, threat of new entrants, and threat of substitutes.<\/p>\nProfit Margin<\/strong> \u2014 The percentage of revenue that remains as profit after all costs are subtracted. Calculated as net income divided by revenue.<\/p>\nProposal<\/strong> \u2014 A written document presented to a potential customer outlining the scope of work, timeline, price, and terms for a project.<\/p>\n