Financial Terms Glossary - S
A book of original entry to record the sales from the invoices or other original sales documents. The journal totals will be posted to a ledger account for Sales at the end of the month.
Sallie Mae is the nation's leading provider of education loans. It has been helping students primarily with federally guaranteed student loans originated under the Federal Family Education Loan Program (FFELP). Learn more at www.salliemae.com.
savings incentive match plans for employees (SIMPLE plans)
See SIMPLE plans.
SBA (Small Business Administration)
The SBA is a federal agency established to assist small businesses with financing and business management. Your local banker is a good source for current information about what the SBA has to offer.
A Schedule K-1 is issued at year-end to each owner of a joint venture, such as an S corporation or a partnership. The K-1 identifies your share of the venture's income, losses, credits, and other tax items which you are to report on your tax return. The IRS gets a copy that it compares to the amounts reported on your income tax return.
SCORE (Senior Core of Retired Executives)
Working through the Small Business Administration, this group of retired business people volunteer their time to assist small businesses. SCORE is an excellent source of expert advice for businesses that need some assistance.
Also referred to as a Subchapter S corporation. This is a small business corporation that has elected not to be taxed as a regular corporation (a Subchapter C corporation). The profit or loss of an S corporation normally gets passed to the shareholders in proportion to their shares in the corporation. The shareholders report the profit or loss on their individual tax returns.
A mortgage on real estate that is subordinated to a first mortgage already recorded against the property.
See also subordinated debt.
A provision in the Internal Revenue Code that allows a taxpayer to deduct qualified equipment purchases in one year that would normally be depreciated over a period of years. A very useful tax benefit for small businesses.
See charitable organization.
A provision in the tax law that you might want to keep in mind. No gain or loss is recognized (taxed) if business and or investment property is traded for qualified like-kind property that is also used in a business or held for investment. In short, if you arrange the proper kind of trade, you avoid income tax until the property you traded for is later disposed of. This is often referred to as a tax-deferred exchange, or less accurately as a tax-free exchange.
Securities and Exchange Commission. The federal agency charged with overseeing the stock market and other investment transactions.
Second-to-die life insurance
See joint and survivor life insurance.
A creditor that holds a mortgage, collateral, or lien to help insure payment of a debt. Payments to secured creditors take preference over payments to unsecured creditors.
This tax is computed on Schedule SE of Form 1040. Net income from self-employment in a business or farming is subject to self-employment tax in order to provide you with social security benefits in retirement. This tax must be added to your income tax for purposes of determining your quarterly tax estimates.
The condition that exists when there is an excess of demand over supply for any product or service. This situation usually results in higher prices to the seller.
selling short (against the box)
See short sale and short sale against the box.
SEP (simplified employee pension)
A SEP is a plan under which the employer makes contributions to individual IRAs for each eligible employee even though all are part of a group plan.
Series EE bonds
Series EE bonds are a type of United States Savings Bond offered by the Treasury Department. A bond can earn interest for up to 30 years. Interest earnings are payable upon redemption. Interest earnings on bonds are exempt from state and local income taxes, but they are subject to federal income tax. Certain bond interest is free from federal income tax if used for qualified higher education expenses.
Selling shares of stock that you do not own. With a short sale, you borrow the shares from your broker with the agreement that you will replace them at a later date, hopefully when the price is lower. The transaction is not subject to income tax until the short sale is covered by the actual purchase and/or transfer of shares of stock.
short sale against the box
A short sale, using borrowed stock, where one owns enough of the stock to cover the replacement at the agreed replacement date.
The current liabilities shown on a company's balance sheet including any current portion of the long-term debt. Liabilities that are normally payable within one accounting year.
Interest computed on a principal balance for a specified period.
See also compound interest.
A retirement plan for employees. Savings Incentive Match Plans for Employees (SIMPLE plans) can be established by employers with 100 or fewer employees. The plan allows employees to make contributions of limited amounts and requires the employers to contribute also.
An unincorporated business owned entirely by one person.
See also corporation.
S & P 500
The Standard and Poor's 500 tracks the leading companies in various industries. Because of its broad representation, many investors and advisors consider it to be the best indication of stock market activity. It is used as the benchmark for performance by most portfolio managers.
You are entitled to take a standard deduction on your income tax return, in lieu of your actual itemized deductions. You can compare the two methods and take the one most advantageous to you. And you can change methods every year. Why would the IRS allow this? The standard deduction has been increased as the years go by so that fewer and fewer people will itemize their deductions. This saves the IRS and the taxpayer lots of time in audits and in recordkeeping.
The expenses incurred in getting a new business up and running. The tax law allows you to write off these costs over a period of months.
See also organizational cost.
statute of limitations
In taxes this is the period of time that the IRS and you have to make changes to your tax return. Generally, the statute of limitations is three years from the time your tax return is filed.
This is the increase in tax cost (basis) in the hands of a new owner of property, such as stepped-up basis for property you inherit. For example, assume that your rich uncle died and left you Blackacre, property which he acquired for $100. If at the time of his death the property was worth $50,000, that is your new stepped-up basis. If you sell Blackacre for $50,000, you will have no taxable gain.
A stock dividend is a dividend issued by the corporation in the form of additional shares of its stock. Such dividends are not taxable unless they are in lieu of cash or they result in changing your proportionate share of the corporation.
See net worth.
Taking depreciation expense on an asset in equal segments. For example, a $10,000 asset depreciated over five years would be expensed at $2,000 per year.
See also accelerated depreciation.
subchapter S corporation
See S corporation.
Any debt that is junior to other debts in establishing a claim against an asset(s).
A group of accounts that support the total shown in the general ledger of accounts. For example, the individual customer accounts receivable ledger cards (possibly hundreds of cards) form the subsidiary ledger. The total of these cards is the amount presented in the general ledger balance. This one-line total is what you see on the balance sheet as accounts receivable. Subsidiary ledgers are the details of the totals presented on the financial statements.
See cash surrender value.
A bookkeeping account used to temporarily enter amounts for which a final expense account has not yet been decided. This account would not normally show in a finalized financial statement.