Business Law Terms and Definitions

First Degree of Consanguinity A near relative of an employer who is exempt from Worker's Compensation coverage. For more information, see Worker's Compensation exemptions. Equity investment Equity investment the cash that business owners invest in the business. Working capital Current assets minus current liabilities. Costs Money obligated for goods and services received during a given period of time, regardless of when ordered or whether paid for. I-9, Employment Eligibility Verification Employers are required to have all employees and owners complete a form I-9 as proof of eligibility to work in the U.S. Factoring A method of raising working capital by selling your business's accounts receivables to a bank at a discounted rate. The bank then manages and collects the money due. Breakeven analysis The point at which the business will neither make a profit nor lose money and where revenues equal expenses. Sole proprietorship Sole proprietorship legal structure that has one person as the owner. Escrow Accounts Funds placed in trust with a third party, by a borrower for a specific purpose and to be delivered to the borrower only upon the fulfillment of certain conditions. Undercapitalization Undercapitalization failure by the borrower to produce the amount of capital that is necessary to finance a project.

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	Did You Know?
	It's important to set clear expectations and rules for your employees Unclear Expectations and Rules for Employees, make sure they acknowledge they are "at will" employees, which means they can quit or be terminated at any time without exposing your business to liability. It's also important to inform your employees that discrimination, sexual harassment and other illegal acts will not be tolerated.