Business English

10. The forecast which predicts how much money the company will have to spend on salaries, heating and lighting, rent, etc., is the forecast of...

Watch BBC Business Course, unit Negotiating Prices; make up your own dialogues.

SMALL BUSINESS in the USA:

an S-corporation is not always best.

It is generally believed that small companies should incorporate as S-corporations. While an S-corporation enjoys many corporate attributes (the main is that the owners of a corporation do not expose their personal assets to corporate liability), it is treated like a partnership for purposes of determining its Federal income tax liability. At the end of each fiscal year, its total earnings (or losses) are prorated to each shareholder, and these earnings (or losses) are incorporated into their individual income tax returns.

Among the advantages of the S-corporation for small business is no “double taxation” - paying an income tax on corporate net income, and then paying an individual income tax on the dividend income subsequently distributed by the corporation.

Thus, an S-corporation “generally will not be liable for federal income tax.” If losses are incurred during the start-up period (or any other period), these losses can be deducted each year from the shareholders' tax returns. All income, losses, credits, and deductions are “washed through” the S-corporation at the end of each fiscal year and carried directly to the individual tax return for each shareholder. Being emptied out at the end of each fiscal year, the S-corporation has no retained earnings account.

For most of small businesses, the S-corporation has long been the preferred corporate structure. The operational accounting is simpler, and accounting, legal, and administrative expenses are minimized. Shareholders receive the immediate benefits of earnings without “double taxation”, and the shelter of tax deductive losses on their individual tax returns. There are sound reasons to state that this is generally the most popular corporate structure.

However, for small businesses that are growing rapidly, the conventional C-corporation status may turn out to be more preferable. The primary motivation for such a change would be the ability to retain and reinvest earnings in the expanding business.

The maximum Federal income tax rate for C-corporation is 34 percent for taxable income up to $10 million, whereas the maximum tax rate on S-corporation income is now the maximum individual rate of 39.6 percent. At the other end of the range, the Federal tax on corporate income of $100,000 is $22,250 for a C-corporation, whereas the incremental tax on this income added to other income of the shareholder in an S-corporation could be as high as $39,600 if the shareholders are already in the maximum tax bracket. If the business is striving to retain and reinvest all possible cash during a period of strong growth, it will obviously forgo distributing cash dividends thereby avoiding the problem of “double taxation.”

The maximum tax will be effectively reduced by more than 16 percent, and substantial funds will then be retained to meet the capital needs of the expanding enterprise. Discounting the effects of depreciation charges, this shift of corporate structure yields an almost 10 percent increase in net cash flow.

Answer the following questions:

1. What types of corporations are described?

2. What is the maximum corporation tax rate for taxable income up to $10.0 million?

3. What is the main advantage of the S-corporation status?

4. What does the term “double taxation” mean?

5. In what case is the C-corporation status more preferable than the S-corporation status?

Substitute the following definitions with the words below:

unlimited liability,legal entity, partnership, limited liability, sole proprietorship.

1. non-incorporated business with unlimited liability owned by one person who may or may not have employees.

2. non-incorporated business formed by the association of two or more persons (but not more than twenty) who share risks and profits according to a partnership agreement.

3. party that may make contracts, carry out businesses, own property, employ people and is capable of suing and being sued for the breach of contract.

4. legal law according to which shareholders are responsible for the company's debt only to the amount unpaid on their shares.

5. legal law according to which owners are responsible for company's debt to the full extent of their fortune.

Fill in the blanks with appropriate forms of business.

1. In ___ there are two or more joint owners of the business. Each of the partners is jointly, and personally, responsible for what is done by the firm. Capital availability is usually a little greater than in ____, though most ____ are small, and often consist of members of the same family.

2. This category covers businesses which are owned and controlled by a single person, whether run by that person or by a hired manager. The owner being solely responsible for everything done by the business, and accountable only to him, can make all the decisions, subject only to what is technically feasible and to market forces. ____ is common in most sectors of the UK economy, especially in retailing.

CONTRACT as a DOCUMENT.

Contract is an agreement made by two or more persons that is enforceable by law. It consists of voluntary promises to do or not to do certain things. When people make a contract, their promises become legal obligations.

Contracts are vital to the economic systems of countries where private enterprise is encouraged. Much of the wealth of free enterprise nations takes the form of such contracts as bonds and promissory notes. Most business activities in these countries depend on contracts. These contracts include promises to deliver or pay for goods, perform or pay for services, pay wages or rent, exchange property, and construct buildings.

Freely made economic decisions are basic elements of the free enterprise system. As a result, a leading principle of contract law is that persons may agree with each other on any terms they think fit. But an agreement that would upset public order is unenforceable. For example, the courts would not enforce an agreement to bribe a public official. The courts also refuse to enforce an agreement if one party has clearly taken unfair advantage of another. The laws bar some people, chiefly minors or the mentally incompetent, from assuming obligations under contract.

The making of a contract usually involves two important acts: (1) making an offer and (2) accepting the offer. The acts may be verbal or in writing. However, the law requires certain contracts to be made in writing. These contracts include agreements to sell or lease property and, for instance, hire purchase agreements and contracts of employment.

Before a contract is formed, the parties usually negotiate the terms of the agreement. One party makes one or several offers. As soon as the other party accepts an offer, the negotiations are over. Under many systems of law, the moment of acceptance is decisive. At that time, the contract is concluded and after the two parties come to an agreement about terms and conditions of the transaction they sign a contract.

Commercial invoices, bills of lading.

Commercial invoices are usually issued by sellers or sellers' banks after the goods are shipped, together with shipping documents invoices are usually sent to the buyers' bank for payment.

Commercial invoices generally contain the following information: number and date of the invoice, number and date of the contract, date of delivery, number and date of the transport document, description of the goods, price per unit, quantity and total amount to be paid.

Transportation documents are usually attached to commercial invoices as a proof of shipment which also enables the buyers to receive the goods. Transportation documents include: bills of lading, air waybills, railway bills, road carriage bills and others depending on the mode of transportation used.

Since sea and river shipments are considered most economical, they are most often used and bills of lading are thus most popular transportation documents.

Bills of lading usually contain the following: name of consignor, name of consignee, name of vessel, shipping date, weight, measurement, marking, number of cases, contents of the cases.

Sometimes, when the packing is bad or the cases are damaged, the master of the ship makes a certain note of it on the bill. It makes the bill dirty then. If no notes are made on the bill it is clean. Usually the contracts say that only clean bills of lading can be attached to the commercial invoices and thus considered a proof of shipment.

Task 1. Fill in the gaps, choosing from the words below:

terms, reclaim, charges, delivery, letter of credit, arbitration, freight/loading, penalty, substandard, parties, payment, specification, late, invoked.

DRAFT CONTRACT

between WIDGETRY Ltd (hereafter known as “the seller”) and MERCURY plc (hereafter known as “the buyer”)

The seller undertakes to supply the buyer with 120,000 super widgets, to BSI (1) … 999and to pay all (2) … and insurance (3) ... .

The terms of (4) ... . and immediate payment of (5) ... charges by confirmed and irrevocable (6) ... are to be standard.

A (7) ... clause will be included in the contract. It will be (8) ... against the seller for late delivery or (9) ... quality; against the buyer for (10) ... payment.

In the event of non-payment, the seller shall be entitled to (11) ... the goods.

In case of a dispute between the (12) ... to the contract, the matter will be taken to independent (13) ... . All the (14) ... of the contract must be complied with by both parties.

You are an Order processor for Office Universe Limited, a London-based stationery and office equipment company. A customer rings with a problem over an invoice.

Here is a copy of the invoice:

Office Universe Limited

430-4 Upper Richmond Road

London SW15 5TY England

Telephone 0171 434 7272 Fax 0171 434 5286

INVOICE

Angus Ltd

Galloway Industrial Estate North Side

Building 15 Your ref: OOU22.10

Aberdeen AB24 5TR Our ref: RG3472/5

Part ref Qty Item Price

2356-1 100 A4ZoomCopyPaper@$2.20 $220.00 4563-1 2 packsMarkerpens@$5.80 $11.60

2156-2 1 Staples 5000 pack $5.20

2134-8 20 Rulers@ $0.80 $16.00

3672-2 100 Coloured ring binders@ $2.10 $210.00 3482-1 100 Pack of dividers @ $0.56 $11.20

Sub-total $473.00 Less discount 5% $23.65

Sub-total $449.35

VAT@ 17.5% $78.64

Sub-total $527.99

+ Carriage and packing $20 + $3.50 VAT @ 17.5% $23.50

TOTAL $551.49

Terms: 30 days from invoice date. Thank you for your custom. Telephone or fax your orders to Julie 24 hours a day, 365 days a year.

Notes:

* You have checked with the original telephoned order and can find no mistake: the customer did order all the goods you have sent. You do sell cheaper copy paper and cheaper ring binders, but with different part reference numbers.

* You accept the customer should have received a 10% discount and free

carriage and packing offer to send a new invoice.

* Your company recently altered its terms to 30 days for all customers and all were notified in a separate letter.

* You cannot take back the order but if the customer is unhappy he/she can return the goods and no fee will be charged.

* Offer to send different quality (standard, not laser quality) copy paper and different ring binders (plain coloured).

Appendix 1

LIST OF TERMS AND WORD-COMBINATIONS

1.

Sales manager

Export/import manager

Marketing manager

to conclude an agreement

to send a fax (~ a letter by fax)

to delay the delivery

to pay penalty

to open a letter of credit

Chief executive officer

an interview

Cover Letter

Resume

Curriculum vitae

a competitive company

to offer a job with

opening position, vacancy

2.

Аpplication for the position

situations vacant/wanted,appointments

a reference, Letter of Recommendation, Testimonial

an experimental period, term of probation

subordinate

superior

entrepreneur, undertaker, businessman

to discharge, fire, sack

deadline

to go on business

a return ticket

two-way or round-trip ticket

Arrivals

Departures

an open-date ticket

to pay cash

fax., fax machine

reference details

3.

Business correspondence

price-list

original contract

letter of credit

invoice

e-mail

to get through the customs (to clear ~)

to apply for a visa

to declare smt

to be liable to duty

to be duty free

Bill of lading

Bill of sale

Inquiry

Goods, wares, merchandise

Wholesale/retail

4.

Availability of goods

In stock/available from stock

Delivery dates

Terms and discounts

Method of Transportation

Insurance

Prices of goods, quotations

Samples of goods

Distributors

to effect payment by letter of credit (cheque, bank transfer)

to meet the standards

company, firm, corporation

to be on sale

Daughter company, subsidiary, affiliated company

Public Limited Company

Shareholder, stockholder

5.

Correspondent account

Draft Contract

Joint venture

to establish (run, close down) a business

Supplier /Buyer/ Seller/Consignee

Typical Contract

Packing

Transportation costs

Terms of delivery and payment

Range of goods, assortment of goods

Firm offer

to be valid till

Performance, technical characteristics

to outperform smth Guarantee period

to place an order with a company for a product

Private Limited Company

Appendix 2

ABBREVIATIONS USED in BUSINESS CORRESPONDENCE.

А/С, АС, ас, С/А, са (account current) - поточний рахунок

а.f. (as follows) - як указано далі

a.m. I. (above mentioned) - вищезгаданий; 2. (ante meri-diem) - до полудня (див. Урок 1)

Appx (appendix) - додаток

Attn (attention) - до уваги (когось)

В/Е (bill of exchange) - перевідний вексель, трата

B/L (bill of lading) - коносамент

CEO (chief executive officer) - виконавчий директор

cf (compare) - порівняйте

CV (curriculum vitae) - коротка біографія

enc, encl (enclosed, enclosure) - вкладений, що додається, вкладення, додаток (до листа тощо)

ехс, excl. (except, excluding, exception, exclusion) - виключаючи, виключення

expn (expiration) - закінчення (терміну)

h.a. (hoc anno, лат.) - в поточному році

inv. (invoice) - рахунок-фактура

IOU (І owe you) - боргова розписка

l.a. (letter of advice) - авизо, повідомлення

L/A (letter of authority) - довіреність

L.C., L/C (letter of credit) - аккредитив

Ltd. (limited) - закрите акціонерне товариство c обмеженою відповідальністю

Ld. - акціонерне товариство c обмеженою відповідальністю

LOC (letter of commitment) - гарантійний лист

mdse (merchandise) - товари

р.а. (per annum, лат.) - на рік

Рlс, PLC (public limited company) - відкрите акціонерне товариство c обмеженою відповідальністю

р.р. (pages) - сторінки

рр, p.p. (per pro, лат.) - від імені і за дорученням

qv (quod vide) - дивись (там-то)

ret, rept (receipt) - розписка, квитанція

rе (regarding) - відносно

rеf. (reference) - посилання

shipt (shipment) - відгрузка, відправка

v., vs, vers. (versus) - против

VAT, V.A.T. (value-added tax) - ПДВ

v.s. (vide supra, лат.) - див. вище.

Appendix 3

DIFFERENCES IN AMERICAN AND BRITISH TERMS.

AE BE

administration government in power уряд (діючий)

blue-chip first-class першокласні

investments investments інвестиції

call loan short-term loan короткострокова позика

checking account current account поточний рахунок

claim letter letter of complaint лист-рекламація

collect on delivery cash on delivery сплата після доставки

common stock ordinary share звичайна акція

corporation law company law закон про компанії

express man carrier посильний

to fix a meeting to arrange а meeting призначати зустріч

freight not prepaid carriage forward без сплати за перевезення

freight prepaid carriage paid із сплатою за перевезення

freight train goods train товарний потяг

government bonds government securities державні цінні папери

in good shape in good condition в гарному стані

investment bank merchant bank инвестиційний банк

law business practice (law) процессуальне право

local taxes rates місцеві податки

to operate to run a business займатися бізнесом

operating costs running expenses поточні витрати

ordinance by-law постанова, указ

to pass up an offer to decline an offer відхиляти пропозицію

preferred stock preference share привілейована акція

president chairman президент (компанії)

right away immediately негайно

shipment consignment партія (товару)

stockholder shareholder акціонер

sturb counterfoil корінець (чека)

tag label етикетка

tender offer пропозиція

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