Glossary of Financial & Legal Terms

The process of recording, organizing, and reporting a business’s financial activities for accurate tracking and compliance. What is Accounting? Accounting...

Money a business owes to its suppliers or creditors for purchases made on credit (a liability on the balance sheet)....

Money owed to a business by its customers for products or services delivered but not yet paid for (an asset...

An accounting method where income and expenses are recorded when they are earned or incurred, regardless of when cash is...

Electronic funds transfer system for batch-processing low-cost bank payments in the United States. What is Automated Clearing House (ACH)?  ACH...

The involuntary closure of a business by the state due to failure to meet compliance requirements like annual report filings...

A formal change made to a company’s original formation documents, filed with the state to update key legal or structural...

An individual who invests personal funds into early-stage startups—usually in exchange for equity—often providing mentorship alongside capital. What is an...

A mandatory yearly filing to a U.S. state that updates the company’s information (like directors, officers, address) and confirms it’s...

A government-issued certificate that authenticates the validity of a document for use in another country, under the Hague Apostille Convention....

A document filed with a U.S. state to legally create a corporation, outlining key details like the company name, address,...

A document filed with a U.S. state to legally create a Limited Liability Company (LLC), outlining company details like name,...

A registered alternate name a business can use to operate publicly, different from its legal entity name. What is an...

A formal examination of a company’s financial records to ensure accuracy, transparency, and compliance with tax or reporting standards. What...

An owner of an LLC who has the legal authority to act on behalf of the company. What is an...

A person or organization formally permitted to act on behalf of a company in specific legal or administrative matters. What...

The maximum number of shares of stock that a corporation is legally allowed to issue, as specified in its Articles...

A financial statement that provides a snapshot of a company’s financial position at a given moment, listing assets, liabilities, and...

The process of matching and verifying that a company’s accounting records (cash ledger) align with the bank’s records (bank statements),...

A beneficial owner is the real person who ultimately owns or controls a company, even if the company is legally...

A confidential report filed with FinCEN (U.S. Treasury) identifying a company’s beneficial owners (and company applicants), required by the Corporate...

A group of individuals elected by shareholders to govern and oversee a corporation’s management and major decisions, typically including company...

The routine recording and organizing of financial transactions (sales, purchases,payments, receipts) of a business, forming the basis of the accounting...

The official address a company uses for registration, correspondence, and legal purposes. What is a Business Address? A business address...

A credit profile tied to your company’s legal entity, separate from your personal credit history. What is a Business Credit?...

The legal structure a company adopts, such as an LLC, corporation, or sole proprietorship. What is a Business Entity? A...

A permit that allows a company to legally operate within a specific city, county, or state. What is a Business...

A type of commerce where transactions occur between two businesses rather than between a business and individual consumers. What is...

A type of commerce where businesses sell products or services directly to individual consumers for personal use. What is B2C...

The internal rulebook of a corporation, establishing how the corporation is governed and operated, including the roles of directors/officers, meeting...

The money, property, or services that an owner or investor puts into a company in exchange for ownership—used to fund...

The total number of shares a corporation is authorized to issue, representing ownership in the company—includes both common and preferred...

A detailed record of a company’s ownership structure—showing who owns what percentage of equity, including founders, investors, and option holders....

An accounting method where income and expenses are recorded only when cash is actually received or paid—commonly used by small...

The movement of money into and out of a business—tracking how much cash is available to operate, pay expenses, and...

A financial report that shows how cash moves in and out of a business during a specific period—broken into operating,...

The official legal document that registers an LLC or Corporation with the state (commonly used in Delaware for LLCs); once...

An official state-issued document that confirms a company is legally registered, up-to-date with all required filings, and authorized to do...

The legal document filed with the state to officially form a Corporation; it establishes the company’s legal existence and is...

An official copy of a business document issued and stamped by the state to confirm it is a true and...

A licensed accounting professional in the U.S. who is qualified to provide tax, audit, and financial advisory services in compliance...

An organized list of all the financial accounts used by a business to classify income, expenses, assets, liabilities, and equity—forming...

The Chief Executive Officer (CEO) is the highest-ranking executive in a company, responsible for overall strategy, major corporate decisions, and...

The Chief Financial Officer (CFO) is the executive responsible for managing a company’s finances, including accounting, budgeting, reporting, and strategic...

The Chief Marketing Officer (CMO) is the executive responsible for leading a company’s marketing strategy, brand development, and customer engagement...

The Chief Operating Officer (COO) is the executive responsible for managing a company’s daily operations and ensuring that business plans...

The Chief Technology Officer (CTO) is the executive responsible for overseeing a company’s technology strategy, infrastructure, and innovation, ensuring that...

The act of meeting all legal, regulatory, and tax obligations required to maintain a business’s good standing and lawful operation...

The legal process of changing a company’s entity type or state of formation—such as converting an LLC to a Corporation...

A legal right that protects original works of authorship—such as books, music, software, artwork, and videos—by giving the creator exclusive...

An official document used by a corporation’s board of directors or shareholders to record and authorize important decisions or actions...

The direct costs of producing or purchasing the goods a business sells—such as materials, labor, and manufacturing—excluding overhead or operating...

A state-imposed label indicating that a company has failed to meet certain compliance obligations, such as filing annual reports or...

An accounting method that spreads the cost of a long-term asset over its useful life, reflecting wear and tear and...

A business model where a company sells its products or services directly to the end consumer without relying on third-party...

A business entity that is separate from its owner legally, but treated as the same person for U.S. federal tax...

The official process of legally closing a U.S. business at both the state and federal levels—requiring formal filings to terminate...

A distribution of a portion of a corporation’s profits to its shareholders, typically in cash (or sometimes stock), usually declared...

A registered trade name a business uses that is different from its legal name—often used for branding, operating multiple lines...

A situation where the same income is taxed twice—first at the corporate level and again at the shareholder level when...

An order fulfillment method where the seller does not keep inventory but transfers customer orders directly to a third-party supplier,...

A unique nine-digit identifier issued by Dun & Bradstreet (D&B) to track a business’s credit and financial history. It’s often...

The buying and selling of goods or services via the internet, often through online stores or marketplaces, involving digital marketing,...

The date on which a legal filing—such as a company formation, amendment, or dissolution—officially takes effect as recognized by the...

Income earned by a non-U.S. person or business that is connected to a trade or business in the United States...

A secure U.S. Treasury online system for paying federal taxes electronically. What is The Electronic Federal Tax Payment System (EFTPS)?...

A unique nine-digit number issued by the IRS to identify a business for tax purposes—similar to a Social Security Number...

A status describing when a non-U.S. person or entity has sufficient business activity in the U.S. to be considered as...

A formal request made to the IRS to choose how a business entity will be classified for U.S. federal tax...

Equity represents an ownership interest in a business, typically expressed as shares or a percentage of ownership, which entitles the...

A financial arrangement where a neutral third party holds funds, assets, or documents on behalf of two or more parties...

The cost a business incurs in its day-to-day operations to generate revenue, such as rent, salaries, utilities, and supplies. What...

A Federal Tax Identification Number—most commonly an Employer Identification Number (EIN)—is a unique nine-digit number issued by the Internal Revenue...

The process by which a business registers to legally operate in a state other than its state of formation, allowing...

A business formed in the United States that is at least 25% owned by a foreign individual, company, or other...

Franchise tax is a state-imposed fee that businesses must pay for the privilege of being registered and operating in that...

A company’s official status showing it is compliant with all state requirements—such as filings, fees, and taxes—allowing it to legally...

For corporations, the Incorporator is the person or entity responsible for preparing, signing, and filing the Articles of Incorporation with...

An Individual Taxpayer Identification Number issued by the IRS to non-U.S. residents and others who are not eligible for a...

A legal obligation or debt a business or individual owes, usually as a result of contracts, laws, or wrongful acts—can...

An individual who is not a U.S. citizen and does not meet the IRS substantial presence or green card test...

A legal document that outlines the ownership, structure, and operating rules of an LLC. What is an Operating Agreement? An...

A tax structure—also called flow-through taxation—where business income “passes through” to the owners’ personal tax returns, avoiding corporate-level income tax...

Net business income earned from a U.S. pass-through entity that may be eligible for a 20% federal tax deduction under...

Quarterly taxes are estimated tax payments made four times a year to the IRS (and sometimes state tax agencies) to...

An individual or company officially appointed to receive a business’s legal documents, government notices, tax forms, and service of process...

The process of restoring a business entity that has been administratively dissolved—by bringing it back into good standing with the...

A document that allows a business to purchase goods tax-free if those goods are intended for resale; used to avoid...

The total amount of money a business earns from selling goods or services before any expenses are deducted. What is...

A routing number is a unique nine-digit code used in the U.S. banking system to identify the specific financial institution...

A U.S. corporation that has elected to be taxed as a pass-through entity, allowing profits and losses to flow directly...

A startup investment agreement where an investor provides capital in exchange for the right to receive equity in a future...

A state-level tax charged on the sale of goods or certain services, collected from customers and remitted to the state...

A U.S. tax form used by partnerships and certain LLCs or S corporations to report each owner’s share of the...

The Secretary of State (SOS) is the state government office responsible for registering and maintaining official records for businesses, such...

A unit of ownership in a corporation, representing a claim on the company’s assets and earnings—commonly issued to founders, investors,...

An individual or entity that owns shares in a corporation, giving them a financial interest in the company and certain...

A private contract between a corporation’s shareholders that outlines their rights, responsibilities, and rules on how the company will be...

A Limited Liability Company with only one owner (member). It offers liability protection and flexible taxation—usually treated as a “disregarded...

A 9-digit identification number issued by the U.S. government to citizens and eligible residents—primarily used for taxation, employment, and government...

A sole proprietorship is the simplest type of business structure in the U.S., owned and operated by one person. It...

A newly founded business, typically designed to scale quickly by solving a problem with an innovative product, service, or business...

State income tax is a tax imposed by individual U.S. states on income earned within their borders. Not all states...

A Statement of Information is a mandatory filing that keeps a U.S. state’s records about your company up to date,...

A legal connection between a business and a U.S. state that requires the business to collect and remit taxes in...

A formal agreement between two countries that reduces or eliminates double taxation on income earned across borders. What is a...

A unique number (such as the EIN, ITIN, or SSN) used by the IRS to identify individuals and businesses for...

The name a business uses publicly that is different from its legal name—also known as a “Doing Business As” (DBA)...

A trademark is a word, phrase, symbol, design, or combination of these that identifies and distinguishes the source of goods...

The individual who ultimately owns or controls a business, even if the business is held through other companies, nominees, or...

A tax imposed by U.S. states on goods purchased without paying sales tax and later used, stored, or consumed within...

A clause in a SAFE or convertible note that sets the maximum company valuation at which an investor’s investment will...

An individual or company that sells goods or services to another business or customer; often used in business-to-business (B2B) transactions...

A type of private equity financing provided by investors to early-stage, high-growth startups in exchange for equity—commonly used to fund...

The process by which someone earns ownership of shares or benefits—such as stock options or equity—over time, rather than receiving...

A service that provides a business with a U.S. mailing address and other office-like functions—such as mail handling and business...

The legal right of a shareholder or member to vote on key company matters, such as electing directors or approving...

IRS forms used by non-U.S. individuals (W-8BEN) and entities (W-8BEN-E) to certify their foreign status and claim tax treaty benefits...

An IRS form used by U.S. persons and entities to provide their Taxpayer Identification Number (TIN) to another party, usually...

An electronic transfer of funds between banks—used for sending money quickly and securely, especially across international borders or for large...

​​A person or company responsible for withholding U.S. taxes from payments made to foreign individuals or businesses and remitting them...

A tax withheld at the source of income—often by the payer—before the payment is made to the recipient. In a...

The difference between a company’s current assets (cash, accounts receivable, inventory) and current liabilities (accounts payable, short-term loans, accrued expenses)....

The last day of a company’s accounting year—used to close the books, prepare financial reports, and file taxes. Most U.S....