Accounting & Tax Definitions -- O

Officers: Officers are people who are appointed by the directors. They manage the daily affairs of the corporation. A Corporation's officers usually consist of a president, vice-president, treasurer, and secretary. In most states, one person can hold all of these positions.

Open Year: A taxable year for which the statute of limitations has not yet expired.

Operating Agreement: An agreement among the LLC members which govern the LLC operations and the rights of its members. It is analogous to corporate bylaws.

Operator: One who holds the working or operating rights in a gas or oil activity and is obligated for the costs of development and production.

Option: An agreement to buy or sell property on or before a specified date at an established price. The sale or exchange of an option to buy or sell property results in capital gain or loss if the property is a capital asset.

Ordinary: Common and accepted in the general industry or type of activity in which the taxpayer is engaged. It is one of the tests for the deductibility of expenses incurred or paid in connection with a trade or business; for the production of income; for the management, conservation, or maintenance of property held for the production of income; or in connection with the determination, collection, or refund of any tax.

Ordinary Income or Loss: Income or loss that is fully includable in (or deductible from) gross income and that does not have the characteristics of capital gain or loss.

Organizational Meeting: The initial meeting where the formation of the corporation is completed. At the organizational meeting a number of initial tasks are completed such as: the articles of incorporation are ratified, the initial shares are issued, officers are elected, bylaws approved, and a resolution authorizing the opening of bank accounts is passed. If the initial directors are named in the articles of incorporation, they can hold the organizational meeting. If they are not named, then the Incorporator holds the organizational meeting.

Over the Counter: The market for securities issued by companies usually not listed on any stock exchange. Over the counter (OTC) trading is the principal market for U.S. government and municipal bonds.

Overhead: Fixed costs not directly applicable to the production of a -product (for example, costs of lighting and heating a factory).

Owner's Equity: What the business is worth to the owner. See Capital and Equity.

Owner-Employee: A sole proprietor (self-employed individual).