Interior Design Business Practices

Front 1

Types of Structures

Back 1

Sole Proprietorship (Owned by one individual)
General Partnership (Owned my to or more people)
Corporation (Association of individuals, which is a seperate legal entity)

Front 2

Limited Liability Company and Limited Liability Partnership

Back 2

Combines the advantages of a corporation and partnership. Investors are members and those who manage are managers.

Front 3

Joint Ventures

Back 3

Temporary association of a group of people to complete a specific job.

Front 4

Professional liability insurance

Back 4

protects the designer in case some action by the designer causes bodily injury or property damage

Front 5

Malpractice/Errors and Omissions Insurance

Back 5

Responses to problems resulting form thins such as incorrect specifications, and mistakes on drawings.

Front 6

General Liability Insurance

Back 6

Protects against damage, liability and personal injury caused by the designer, employees, consultants or other people hired by the designer

Front 7

Property Insurance

Back 7

Protects the designer's building against diasters (fire, theft, flood, etc)

Front 8

Personal Injury Protection Insurance

Back 8

Protects the designer against slander, libel, defamation of character, etc.

Front 9

Worker's Compensation insurance

Back 9

Mandatory, protects employees in the event of injuries caused by work related activities

Front 10

AIA Document A251

Back 10

General conditions of the contract for furniture, furnishing and equipment. The owner is required to carry their own liability insurance as well as property insurance for the full insurable value of the work.

Front 11

Types of accounting methods

Back 11

Cash (Revenue expenses are accounted for when the money was received or paid)

Accrual Method (Revenue/expenses are accounted for at the time they are earned or incurred)

Front 12

Cash Accounting

Back 12

Usually used by single person or small firms. not used by corporations or to maintain inventory.

Front 13

Accrual method

Back 13

Mandatory for some types of businesses. Better overall picture of a business' financial status

Front 14

Double Entry Bookkeeping

Back 14

All transactions are listed chronologically in a journal then posted into a ledger in which transactions are grouped into individual accounts

Front 15

Balance Sheet

Back 15

Summarizes all assets and liabilities. Assets must equal liabilities. One important part is net worth or owner's equity.

Front 16

Net Worth

Back 16

Total Assets + Total Liabilities

Front 17

Owner Equity

Back 17

Money invested in a business by the owner or stock holders

Front 18

Balance Sheets

Back 18

total assets must equal the total liabilities + the net worth or owners equity.

Front 19

Cash Flow Statement

Back 19

Shows actual inflows and outflows of cash.

Front 20

Cash Equivalence

Back 20

Short term investments that can be quickly converted into cash.

Front 21

Fundamental equation for financial planning

Back 21

Profit + Expenses = Revenue
or Revenue - Expenses = Profit

Front 22

Project Progress Report

Back 22

shows the hours and labors cost of each phase of the project for the current reporting period

Front 23

Office Earning Report

Back 23

Summarizes each project in the office in terms of the amount revenue generated, expenses, unbilled services, percent complete, and profit or loss to date.

Front 24

Aged accounts receivable report

Back 24

Status of all invoices for all projects and the age of each invoice. Average collection period of invoices is 60-75 days.

Front 25

Time/Analysis Report

Back 25

List each employee and the number of hours spent on direct/indirect labor

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Chargeable Ratio or utilization rate

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Percentage of time or dollars spent on direct labor divided by the total time or dollars spent on direct or indirect labor in addition to vacation/holiday/sick leave.

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current ratio

Back 27

Total current assets divided by current liabilities. measures the firms ability to meet current obligations.

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Net profit before tax

Back 28

Percentage of profit based on net revenue, total anual revenue minus consultant fees and reimbursable expenses.

Front 29

Overhead rate

Back 29

ratio of total office overhead to total direct labor

Front 30

Business Licenses

Back 30

If you resale you have to have a sales tax license (resell licenses)

Front 31

SS-4

Back 31

Form to get EIN

Front 32

ADA applies to

Back 32

firms with 15 employees or more (in most cases)

Front 33

AIA Document B152

Back 33

Itemized list of the most typical services that an architect or interior designer performs