Terms and Definitions

 

Look up common, but confusing terms related to starting, maintaining, and growing your business.

 

Accessory Use

Accessory use means using a building or piece of land in a way that is different than its primary designation (See Primary Use). A musical rehearsal studio or massage therapy office located inside your house is an example of an accessory use. A "use" in city planning refers to the way a building or piece of land is designated to be used. For example, a piece of land may be designated as residential, meaning it can only be "used" as a home.

Accounts Receivable

Money that is owed by customers for goods or services that have not yet paid for.

Application Fee

A one-time fee paid at the time the application is submitted. Be aware that for some permits, you may have to pay for both the application and the permit. Application fees are usually not refundable and paying one does not guarantee you will receive the permit you applied for.

Assets

Assets are property that your business owns. This includes anything that has value, such as cash, accounts receivables, inventory, supplies, equipment, etc.

Branding

The identity for your product or service that differentiates it from competition.

Brick & Mortar

Brick and mortar refers to businesses that have physical (rather than virtual or online) presences - in other words, stores that you can physically enter to purchase merchandise. When the term came about, most buildings were made of brick and mortar. Though we use all kinds of building materials today, the term is still common.

Building Envelope

The maximum square footage and number of floors/building height allowed on a property by the City's zoning restrictions.

Business Entity

A business entity is established as separate from its owners to maximize tax strategies, create liability protection, and ensure asset protection. Corporations, limited liability companies, and sole proprietorships are types of common business entities.

Business Personal Property

Any tangible property owned and used for your business. This includes all machinery, fixtures, office furniture and equipment is considered Business Personal Property. In general, business personal property is all property owned or leased by a business except licensed vehicles, business inventory, intangible assets or application software.

Business Plan

A business plan is an essential roadmap for business success. This living document generally projects 3-5 years ahead and outlines the route a company intends to take to grow revenues.

Cash Flow

A business's cash flow is the measurement of cash flowing into and out of the business within a set amount of time. For example, you might bring in $100 in sales, but spend $50 in supplies within a given month

Change of Use

Any construction or remodeling that changes a facility into a different type of facility, for instance, if a print shop is changed into a restaurant. A change of use may trigger different zoning and permit approvals.

Crowdfunding

A method of raising capital in small amounts from a large group of people using the Internet and social media.

Demographics

A statistical view of a population, generally including age, gender, income, schooling, occupation and so on. Analyzing demographics of your customer base is very important in determining branding and marketing.

Doing Business As (DBA)

A DBA is a name a business operates under that is different from the legal name of the business. For example, the legal name for a home painting service might be Johnson Enterprises LLC, but the DBA might be Johnson's Home Painting Services.

E-Commerce

E-commerce is the act of selling products or services over the internet. When you have an online presence through which you try to make a profit, you are involved in e-commerce.

Entitlement

Approval or permission by the City to use or develop land. Entitlements are required unless your building and all of your proposed business activities are permitted under the city's zoning regulations.

Entity

Organization established as a separate existence for the purposes of taxes. Corporations, limited liability companies, and sole proprietorships are types of common business entities.

Entrepreneurship

The process of identifying and starting a new business venture, sourcing and organizing the required resources, while taking both the risks and rewards associated with the venture.

Fixed Costs

Fixed costs are the costs that do not change in relation how much you sell. Paying rent or salaries are examples of fixed costs. They do not change if your sales or income increase or decrease.

Food Service Establishment (FSE)

A facility or business that provides food to the public. Examples of FSEs include restaurants, commercial kitchens, markets, food processing plants, caterers, hotels, schools, and hospitals.

Form 1099

A 1099 is an IRS form for the purpose of declaring income from non-salaried sources. Independent contractors should receive a 1099 by January 1 of each year from anyone they perform more than $600 of work for. Income reported to the IRS on a 1099 is taxable by the City of Encinitas if it does not qualify for a tax exemption.

Liabilities

Items in which you owe money and/or debts. If the debt can be repaid in less than five years, it's considered a short-term liability; debts that are to be paid in more than five years are a long-term liability.

Microfinance

A source of financial services for entrepreneurs and small businesses lacking access to banking and related services.

Net profit

Revenue minus your costs AND tax.

Revenue

The money made from the sale of your product or service.

Rezoning

If a proposed development does not comply with the city's existing zoning code, you may apply to change the zoning into one that will allow your development.

Variable Costs

Variable costs are costs that change in proportion to the number of units produced. For example, if you own a dog grooming business, dog shampoo is a variable cost. You only incur the cost based on the number of dogs you wash. Variable costs aren't as risky as fixed costs because you only incur them when you sell your product or service.

Variance

A waiver of zoning requirements. Variances apply only to building restrictions (e.g., height, size), and not to allowable land uses.

W2

The IRS form for reporting employee income.

Zoning

Allowable land use and building restrictions for particular geographic areas, as defined by the City. If your project is not permitted by the zoning regulations, you will need to be apply for approval with the City.