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Glossary
The words on US forms, explained plainly.
74 terms, each explained in one sentence you can read on its own. Open any term for the full explanation.
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147C letter
The IRS's confirmation of an existing EIN, issued on request by fax or post, and the usual replacement when the original CP 575 is lost.
147C letterThe IRS's confirmation of an existing EIN, issued on request by fax or post, and the usual replacement when the original CP 575 is lost.83(b) electionA founder's choice to be taxed on restricted stock when it's granted rather than as it vests, filed with the IRS within 30 days, with no extension.
Administrative dissolutionA state ending a company that stopped filing or paying; usually reversible by reinstatement, at a cost, within a limited time.Annual reportThe yearly filing a state requires to keep a company in good standing: $60 in Wyoming; a Delaware LLC files none and pays a yearly tax instead.ApostilleA certificate added to an official document so it's accepted in other Hague Convention countries; often asked for on US company documents.Articles of OrganizationThe document filed with a state to create an LLC; Delaware and some other states call it a Certificate of Formation.
C-CorporationA US corporation taxed on its own profit, which issues stock and is what US investors' paperwork assumes; usually formed in Delaware.Cap tableThe record of who owns what share of a company, including options and convertible instruments; Standard and Premium record yours at formation.Certificate of authorityThe document a state issues when a company formed elsewhere registers to do business there; the result of foreign qualification.Certificate of FormationDelaware's name for the document that creates an LLC, the equivalent of Articles of Organization in other states.Certificate of incumbencyA document signed by a company's manager or officers listing who holds which role and who may sign; some banks abroad ask for one.ComminglingMixing a company's money with its owner's; the most common way an LLC's owner loses the liability protection the LLC exists to provide.CP 575 letterThe IRS notice confirming a newly assigned EIN, posted once to the address on the application; the document banks usually ask to see.
DBA (doing business as)A trade name a company uses instead of its legal name, registered with the state or county; not a separate company.Delaware annual LLC taxThe flat $400 tax every Delaware LLC pays by 1 June each year, raised from $300 in 2026; Delaware LLCs file no annual report.Disregarded entityA single-member LLC the IRS ignores for income tax, treating its income as the owner's; it still files Form 5472 if the owner is foreign.
Economic nexusSales into a state above its threshold, usually $100,000 a year, which makes a seller elsewhere collect that state's sales tax with no presence there.Effectively connected income (ECI)Income connected with a US trade or business, which the US taxes a foreign person on at ordinary rates; pay for work done abroad usually isn't ECI.EIN (Employer Identification Number)The nine-digit tax number the IRS assigns to a business, and the first thing every US bank, payment processor and marketplace asks for.Employer of recordA company that legally employs staff on another's behalf, handling payroll and compliance, so a foreign-owned company can have a US employee.Estimated taxAdvance payments of US income tax made during the year by a corporation, or an individual with US-taxable income, once the tax passes a threshold.
FDAP incomeFixed or periodic US-source income such as dividends, interest and royalties, withheld on at 30% or a treaty rate when paid to a foreign person.FinCENThe US Treasury's Financial Crimes Enforcement Network, which ran beneficial ownership reporting and sets the anti-money-laundering rules banks follow.Fiscal yearThe twelve-month accounting period a company files on; the calendar year for almost every small company and every individual-owned single-member LLC.Foreign qualificationRegistering a company in a second state where it does business; "foreign" here means from another state, not another country.Form 1040-NRThe US tax return for a non-resident individual with US-taxable income, such as income from a US trade or business; most foreign LLC owners don't owe one.Form 1065The US partnership return, filed yearly by a multi-member LLC, with a Schedule K-1 for each owner showing their share.Form 1099-NECThe form a US company files for each US contractor it paid $2,000 or more in a year, due to the contractor and the IRS by 31 January.Form 1120The US corporate income tax return, filed yearly by a C-Corporation and, as a pro forma version, by a foreign-owned single-member LLC.Form 5472The yearly IRS information return a foreign-owned US company files to report transactions with its foreign owner, with a $25,000 penalty for missing it.Form 7004 (extension)The IRS form that gives a business six more months to file its return, including the pro forma 1120 with Form 5472; it doesn't extend time to pay.Form 8822-BThe IRS form a business files by post to change its mailing address, location or responsible party; a new responsible party must be reported within 60 days.Form 8832 (entity classification election)The IRS form an LLC files to be taxed as a corporation instead of as a disregarded entity or partnership; rarely what a foreign owner wants.Form SS-4The IRS application for an Employer Identification Number, sent by fax or post, or made by phone, when the responsible party has no SSN or ITIN.Form W-8BEN and W-8BEN-EThe IRS forms a foreign person or foreign company gives a US payer to certify foreign status and, where it applies, claim a treaty rate.Form W-9The form a US person or US company gives a payer with its tax number; what a multi-member LLC or corporation gives a US client.Forms 1042 and 1042-SThe IRS forms a US payer files to report US-source income paid to foreign persons, such as dividends or royalties, and the tax withheld on it.Franchise taxA state's yearly tax on a company for existing or doing business there, nothing to do with franchises; Delaware corporations and Texas companies owe one.
Independent contractorSomeone who provides services on their own terms rather than as an employee; paid without payroll, and reported on Form 1099-NEC if in the US.ITIN (Individual Taxpayer Identification Number)A personal US tax number for people who must file a US return but can't get an SSN; not needed to form a company or to get its EIN.
Marketplace facilitatorA marketplace such as Amazon or Etsy that state law makes responsible for collecting sales tax on its sellers' sales.MemberAn owner of an LLC, the LLC's equivalent of a shareholder; members may run the company themselves or appoint managers.Merchant of recordA service such as Paddle that sells your product as the legal seller, handling payments, sales tax and VAT, and pays you what's left.Multi-member LLCAn LLC with two or more owners; a partnership for US tax, filing Form 1065 with a Schedule K-1 for each member.
Pass-through taxationTax treatment where a company pays no income tax itself and its profit is taxed to its owners, as with an LLC or a partnership.Permanent establishmentUnder a tax treaty, a fixed place of business or dependent agent in a country, which lets that country tax the business profits linked to it.Piercing the corporate veilA court holding a company's owner personally liable for its debts, usually because the company wasn't run as separate from the owner.Pro forma Form 1120A mostly blank corporate tax return that a foreign-owned single-member LLC files as the cover for its Form 5472.
Registered agentThe person or company with a street address in the state who receives legal papers and state notices for a company during business hours.Reportable transaction (Form 5472)Any exchange of money or property between a US company and its foreign owner that goes on Form 5472, including the money used to form the company.Resale certificateA form a registered seller gives a supplier to buy goods for resale without paying sales tax, based on its sales tax registration in a state.Responsible partyOn Form SS-4, the person who ultimately owns or controls the company: the owner of a single-member LLC, and never the registered agent.
S-CorporationA tax election that lets a US corporation or LLC pass its profit through to its owners; not available if any owner is a non-resident alien.SAFE (Simple Agreement for Future Equity)An investment contract, published by Y Combinator, where an investor pays now for shares issued at a later priced round; used by US corporations.Sales tax permit (seller's permit)A state registration that lets a seller collect its sales tax and buy stock for resale tax-free; needed once there's nexus, and not a business licence.Schedule K-1The statement a partnership gives each owner showing their share of its income, deductions and credits, filed with Form 1065.Series LLCAn LLC that can create internal series, each with its own assets and liabilities, allowed in Delaware, Wyoming and some other states; rarely needed from abroad.Service of processThe formal delivery of a lawsuit or legal notice to a company, made to its registered agent so the company can't claim it never knew.Single-member LLCAn LLC with one owner; a disregarded entity for US income tax and, when the owner is foreign, a Form 5472 filer every year.SSN (Social Security Number)The US personal tax and benefits number for citizens and people authorised to work; not something a founder abroad has or needs to own a US company.
US trade or business (USTB)Regular, continuous business activity in the US that makes a foreign person's connected income taxable there; decided by facts, not where you formed.USPS Form 1583The Postal Service form that authorises a mail receiving agency to accept post for a person or company, with identity checked by the agency or a notary.
Withholding taxTax a US payer deducts before paying a foreign person: 30% on US-source passive income, unless a treaty rate is claimed on a W-8.Wyoming annual report licence taxWyoming's yearly charge on an LLC: $60, or $0.0002 per dollar of Wyoming assets if more, due on the first day of the month it was formed in.
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