Tax & accounting glossary.
The US tax and accounting terms you'll actually run into, explained simply by our CPA & EA team.
US tax and accounting come with a lot of jargon. Here are the terms you'll run into most often as a founder, freelancer or business owner, explained in plain English by our CPA & EA team.
Certified Public Accountant
A state-licensed accounting professional authorized to prepare and sign tax returns and represent clients before the IRS on any matter. Full definition →
Enrolled Agent
A federally licensed tax practitioner with unlimited rights to represent any taxpayer before the IRS, in any state, the highest IRS credential. Full definition →
Form 5472
An IRS information return required for US LLCs that are 25%+ foreign-owned. Missing or late filing carries a penalty starting at $25,000 per form. Full definition →
Form 1120 / 1120-S
Form 1120 is the US corporate income tax return; 1120-S is the version for S-corporations, which pass income through to shareholders. Full definition →
Form 1065
The US return for partnerships and multi-member LLCs; it reports income and issues each partner a Schedule K-1. Full definition →
EIN
Employer Identification Number, a federal tax ID for your business. Non-residents can obtain one without a Social Security Number. Full definition →
ITIN
Individual Taxpayer Identification Number, a tax ID for individuals who must file US taxes but aren't eligible for an SSN. Full definition →
Sales-Tax Nexus
A connection to a US state, through sales volume, employees or inventory, that creates an obligation to collect and remit sales tax there. Full definition →
US GAAP
Generally Accepted Accounting Principles, the standard framework for US financial statements, often required by investors and lenders. Full definition →
BOI Report
Beneficial Ownership Information report filed with FinCEN, identifying the individuals who ultimately own or control a US company. Full definition →
Schedule K-1
The statement a partnership or S-corp issues each owner, showing their share of income and deductions to report on their personal return. Full definition →
W-8BEN / W-8BEN-E
Forms non-US individuals (BEN) and entities (BEN-E) sign to certify foreign status and claim tax-treaty rates on US payments. Full definition →
FBAR (FinCEN 114)
A report US persons file when foreign financial accounts exceed $10,000 combined at any point in the year. Heavy penalties for skipping it. Full definition →
S-Corp Election (Form 2553)
The form that turns an LLC or corporation into an S-corp for tax — due within 2 months and 15 days of the tax year it takes effect. Full definition →
Registered Agent
The person or company designated to receive legal and state documents for your entity in its formation state. Required in every state. Full definition →
Pass-Through Entity
A business whose income is taxed on the owners' returns rather than at the entity level — partnerships, S-corps and most LLCs. Full definition →
Estimated Taxes
Quarterly prepayments of income and self-employment tax owed by people without withholding — due April, June, September and January. Full definition →
Form 1099-NEC
The form businesses use to report payments to US contractors, due to the contractor and the IRS by January 31. Full definition →
Franchise Tax
A state charge for the privilege of existing — owed even at zero profit. Delaware's $300 LLC tax and California's $800 minimum are the famous ones. Full definition →
Chart of Accounts
The organized list of every account your books post to — the skeleton that decides whether your reports mean anything. Full definition →
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