- GLOSSARY -

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Annual Report:
This includes simply ensuring that your registered agent and address are up to date, and submitting a filing fee to your state of incorporation. The report is due every year (or biannually in some states) on the last day of the month in the month in which you completed your business formation (LLC, Corporation, etc).
*This is different from an annual financial report for publicly trading companies!

Articles of Incorporation: 
Articles of Incorporation are a legal document filed with a state's Secretary of State (or other relevant office) to create a corporation. The Articles of Incorporation outlines the corporation's purpose, the number of authorized shares of stock, how the directors will be elected and the names and addresses of the incorporators. The Articles of Incorporation is the first step to forming a corporation and must be filed before the corporation can conduct business.

Articles of Organization:
The articles of organization are a document similar to the articles of incorporation, outlining the initial statements required to form a limited liability company (LLC) in many U.S. states. Some states refer to articles of organization as a certificate of organization or a certificate of formation. Once filed and approved by the Secretary of State, or other company registrar, the articles of organization legally create the LLC as a registered business entity within the state.


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Banking Resolution:
An LLC Banking Resolution is a formal document that can be used for an LLC to establish a bank relationship. It defines the representatives who are authorized to manage the company's bank account, including their roles and privileges. 

Board of Directors:
A Board of Directors is a group of people responsible for governing the activities of a business or organization. The board is typically made up of people elected by shareholders and is responsible for making decisions regarding the company's operations, finances, and strategic direction. The board also oversees the management of the organization, sets policies, and evaluates performance. Board members are typically experienced professionals with expertise in their particular fields, and are often compensated for their efforts.

Business Insurance:
Business Insurance is a type of coverage that helps protect businesses from financial losses related to unexpected events, such as property damage, accidents, and legal action. It can help cover medical expenses, legal fees, and repair costs. It can also provide protection from claims made against the business, such as liability claims and workers compensation claims. Business insurance is an important risk management tool for businesses of all sizes, as it can help protect against potential financial losses.

Business Model:
A business model is a plan for how a company will generate revenue and make a profit. It outlines the goods or services the company will offer, how it will market and promote them, and the infrastructure needed to support them. It also looks at the company's competitive advantages and how it will use them to increase profits and market share. Business models can be used to evaluate a company's potential for success and inform decisions about future investments.

Business Plan:
A business plan is a written document that outlines the goals and objectives of a business, as well as the strategies and activities that will be undertaken to achieve them. It can also include information about the team involved, the resources available, the market environment, and the financial projections. A business plan can be used to secure funding, attract investors, and develop strategies for growth.



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C-Corp:
A C Corporation (C Corp) is a type of business entity that is separate from its owners. It is the most common type of legal business entity in the United States and is recognized as a legal entity by the Internal Revenue Service. C Corporations are owned by shareholders who elect a board of directors to oversee the corporation's operations and make decisions on behalf of the shareholders. C Corporations are taxed separately from their owners, meaning the corporation pays its own taxes on profits, and shareholders are taxed on their dividends. C Corporations are also limited in their ability to raise capital due to restrictions on the number of shareholders and the types of investments allowed.

Capital Contribution:
A capital contribution is the investment made by a business owner into the business. This investment often comes in the form of cash or assets, such as equipment or property. This contribution can also include the time and effort invested by the business owner. The amount of capital contributed by the owner is a key factor in determining the ownership structure and the overall success of the business.

Certificate of Good Standing:
A Certificate of Good Standing (also known as a Certificate of Existence or Certificate of Authorization) is a document issued by a state government that confirms that a business entity is in compliance with its state's laws and regulations, and is authorized to conduct business. It confirms that the company has paid all required fees and taxes, and has submitted all required documents. The certificate is typically used when a company needs to prove its existence and authority to do business with other entities.

Certificate of Incorporation:
A Certificate of Incorporation is a legal document issued by a state government that officially creates a corporation. It includes the company name, its purpose, the number of shares of stock it can issue, and the name and address of its registered agent. The Certificate of Incorporation is required to be filed with the state government in order for the corporation to be legally formed. It is the first official document of the corporation and is necessary for the corporation to be able to enter into contracts, open bank accounts, and generally conduct business.



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DBA (Doing Business As):
Doing Business As (DBA) is a business formation that allows an individual or entity to conduct business under a name different from their legal name. The DBA is typically used by sole proprietors, partnerships, and limited liability companies (LLCs) that want to use a name other than their legal name for their business. A DBA must be registered with the local government and is often referred to as an assumed name, fictitious name, or trade name.



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Employee Identification Number (EIN):
An Employer Identification Number (EIN) is a nine-digit number assigned by the Internal Revenue Service (IRS) to identify a business entity for tax filing and reporting purposes. It is also known as a Federal Tax Identification Number (FTIN) and is used to identify a business for other purposes, such as when opening a bank account, applying for loans, or filing for bankruptcy. All businesses must have an EIN in order to legally operate in the United States.



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Fictitious Business Name:
A Fictitious Business Name (also known as a trade name or assumed name) is a business name that is different from the legal name of the company or individual who owns it. This name is used to identify the business, and can be used for advertising and marketing purposes. It is important to register a fictitious business name with the appropriate government agency in order to operate a business under that name. Doing so also helps to protect the business owner from legal liability.

Foreign Entity/Organization:
At the state level, the designation of a foreign entity simply refers to a business that was formed in another state. Depending on the state, foreign entity registration may also be referred to as a certificate of authority, a foreign qualification, or a certificate of registration.



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General Liability Insurance:
General Liability Insurance is a type of insurance policy that helps protect businesses from claims arising from bodily injury, property damage, or personal/advertising injury caused by the business or its employees. It also helps cover the costs of legal fees, settlements, and judgments related to these claims. It is important for businesses to have this kind of insurance to protect themselves from financial losses due to claims.

General Partnership (GP):
A General Partnership (GP) is a business structure in which two or more people share ownership and management responsibilities. All partners are personally responsible for the business's debts, meaning that each partner's individual assets are at risk. GPs are relatively simple to form and operate, but they do not provide the same level of personal asset protection that other business structures do. Taxation is also simpler than with other business structures, as GPs are not taxed as separate entities.



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Holding Company:
A Holding Company is a company that owns other businesses. The Holding Company does not typically produce goods or services itself but instead owns shares of other companies. The Holding Company may have control of the other companies through majority ownership of the shares, or it may have a minority interest. The purpose of a Holding Company may be to provide an additional layer of protection from liability to the other companies, to provide a means for the companies to pool resources, or to provide a means for one company to gain control of another company.



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Incorporation Date:
Incorporation Date is the date when a business entity is officially formed and accepted by the state. It is the date when the Articles of Incorporation are filed with the state government, and the business is given its own legal identity. The incorporation date is an important date in the life of a business, as it marks the formation of the business and the beginning of its legal obligations.

Incorporator:
An incorporator is an individual (or entity) that is responsible for filing the articles of incorporation with the relevant state government to create a corporation. They must provide information such as the name and address of the corporation, the purpose of the corporation, the number of shares of stock the corporation is authorized to issue, the names and addresses of the directors, and the name and address of the registered agent. The incorporator is also responsible for filing any amendments to the corporation's articles of incorporation.

Initial Capital Contribution:
Initial Capital Contribution is the amount of money that the founders of a business each contribute to the business in order to launch or form it. This money can come from any source, such as personal savings, loan capital, or investments, and will be used to cover the costs of setting up the business, such as legal fees, office space, and other expenses. The initial capital contribution will also be used to provide the business with working capital, which will be used to cover the costs of day-to-day operations.



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Limited Liability:
Limited Liability is a legal concept in which a business structure limits the personal liability of its owners for any financial debts or legal judgments against the business. This means that if a business is sued or incurs debt, the owners are not personally liable for the amount owed and their personal assets cannot be seized to pay the debt. Limited Liability is an important feature of many business structures, including corporations, limited liability companies, and partnerships.

Limited Liability Company (LLC):
A Limited Liability Company (LLC) is a business structure that combines the pass-through taxation of a partnership or sole proprietorship with the limited liability of a corporation. Owners of an LLC are called members, and members are not personally liable for the debts and obligations of the LLC. Additionally, members of an LLC are not taxed on the profits of the LLC, but instead, profits and losses are passed through the LLC to its members, who report the profits and losses on their individual tax returns.

LLC Filing Receipt:
A filing receipt for LLC is a receipt that confirms that you have submitted an application for the formation of a limited liability company (LLC). This receipt is issued by the state agency that handles LLC filings, which is usually the Secretary of State. You will receive it whether you file by mail or online.

LLC Operating Agreement:
A Limited Liability Company Operating Agreement is a contract between the members of a limited liability company (LLC) that outlines the management, operations, and capital contributions of the LLC. It describes the rights and responsibilities of each of the LLC's members, as well as the roles and duties of the LLC's managers. The Operating Agreement also covers how the LLC's profits and losses will be allocated among the members, how disputes will be resolved, and how the LLC can be dissolved. All LLCs should have an Operating Agreement, as it helps to protect the LLC's members from personal liability for the LLC's debts and obligations.

Limited Liability Partnership (LLP):
A Limited Liability Partnership (LLP) is a business formation that combines elements of a limited partnership and a corporation. It allows a business to have multiple partners, each of whom have limited liability for the debts and obligations of the business. This means that if the business fails, the partners are liable only for the amount of money they have invested in the business and not for any other debts and liabilities. The partners also have the flexibility to manage the business as they see fit, and can be held liable only for their own actions and not for the actions of other partners.

Limited Partnership (LP):
A Limited Partnership (LP) is a business structure in which two or more partners share ownership and management responsibilities. One partner, the general partner, has unlimited liability and is responsible for the day-to-day operations of the business. The other partner, the limited partner, has limited liability and is not actively involved in the business but still has a financial interest in it. The limited partner's liability is limited to the amount of money they have invested in the business.



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Members (in context of an LLC):
Members are the individuals or entities that make up a Limited Liability Company (LLC). They are the owners of the LLC and are sometimes referred to as "members" or "owners." Members can be individuals, corporations, or other entities. They share in the profits and losses of the business, and they are not personally liable for the debts and obligations of the LLC.



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Non-Profit Organization:
A Non-Profit Organization is an organization which does not distribute profits to its members or shareholders. These types of organizations are typically established to provide some kind of public service or to promote a specific cause. They are usually funded by grants, donations or other forms of philanthropic support. Non-profits are often tax-exempt, meaning that they do not have to pay taxes on the income they generate. Non-profits are usually governed by a board of directors which is responsible for setting policy and making decisions on behalf of the organization.



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Operating Agreement:
An operating agreement is a legal document between the owners (members) of an LLC that governs how decisions are made, contributions, and the entity's ownership. The purpose of the document is to govern the internal operations of the business in a way that suits the specific needs of the business owners, called "members". Once the document is signed by the members of the limited liability company, it acts as an official contract binding them to its terms. An operating agreement is mandatory as per laws in only 3 states: California, Missouri, and New York. LLCs operating without an operating agreement are governed by the state's default rules contained in the relevant statute and developed through state court decisions. An operating agreement is similar in function to corporate by-laws, or analogous to a partnership agreement in multi-member LLCs. In single-member LLC, an operating agreement is a declaration of the structure that the member has chosen for the company and sometimes used to prove in court that the LLC structure is separate from that of the individual owner and thus necessary so that the owner has documentation to prove that he or she is indeed separate from the entity itself.



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Parent Company:
A parent company is an entity that owns enough voting stock in another company to control its operations and management. Generally, parent companies are established to oversee the operations of their subsidiaries, which are companies that are owned or controlled by the parent company. The parent company may be a publicly traded corporation, a privately held company, or a partnership. Parent companies are typically larger, more established organizations that have the financial resources and management expertise to oversee the operations of their subsidiary companies.

Partnership:
Partnership is a business formation involving two or more people who share responsibility for the business’s operations and profits. Partners are jointly and severally liable for the debts of the partnership. The partners share management and decision-making responsibilities, and each partner typically contributes capital and labor to the business. A partnership agreement outlines the rights and responsibilities of the partners, as well as the ownership of the business, the division of profits and losses, and any other important information.

Pass-Through Entity:
A Pass-Through Entity is a business structure in which profits, losses, deductions, and credits are passed through to the owners and reported on their individual tax returns. This type of entity avoids the double taxation of C Corporations, as the entity itself is not taxed. Instead, the profits, losses, deductions, and credits are reported on the individual tax returns of the owners, and the entity itself does not pay any taxes. Examples of Pass-Through Entities include Sole Proprietorships, Partnerships, and Limited Liability Companies (LLCs).

Private Company:
A private company is a business entity owned by a small group of individuals, usually the company’s founders, directors, or shareholders. Private companies are not subject to public ownership or traded on the stock market, as their shares are not freely available for purchase by the public. Private companies are not required to make their financial information public, allowing them to maintain a greater degree of confidentiality than public companies. Private companies can be limited liability companies (LLCs), partnerships, sole proprietorships, or corporations.

Public Company:
A public company is a company whose shares are traded on a public stock exchange. It is a business entity that has issued shares to the public, usually through an initial public offering (IPO). Public companies are subject to greater regulations and reporting requirements than private companies, and their shares are bought and sold by the public. They are also required to disclose their financial information to the public, including their profits, losses, and other financial information. 



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Registered Agent:
A registered agent is a person or company appointed to receive legal documents on behalf of an organization. The registered agent must have a physical address within the state of incorporation and be available during normal business hours. The registered agent is responsible for accepting service of process notices, official government notifications, and other legal documents on behalf of the organization. The registered agent must forward any documents received to the appropriate person within the organization.



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S-Corporation:
An S corporation is a tax classification that can protect small-business owners' assets from double taxation. An S corp. utilizes pass-through taxation, meaning an owner claims a share of company profits on their individual tax return. This ensures profits aren't double-taxed (once under the corporation and again under the owner). An LLC CAN be taxed as an S-Corp; this does NOT change the structure of the business, only the taxation.

Series LLC:
A Series LLC is a type of limited liability company (LLC) that is created under state law and allows a single company to create separate divisions, or series, under its umbrella. Each series is protected by a shield of limited liability from the debts and obligations of the other series within the LLC. This allows for a single LLC to operate multiple businesses without having to form separate LLCs for each entity. Additionally, each series may have its own assets, liabilities, profits, losses, and owners.

Shareholder Agreement:
A Shareholder Agreement is a legally binding document which sets out the rights, obligations and responsibilities of shareholders in a business. It outlines the ownership structure, voting rights, and the management of the business. It also specifies the rules for the issue and transfer of shares, dividend and profit distributions, and the resolution of disputes between shareholders. The agreement is typically tailored to the specific needs of the company and the shareholders involved.

Shareholders:
Shareholders are individuals or entities who own shares in a company. They have a financial interest in the company, and the number of shares they own indicates the size of their stake. They are entitled to a portion of the company's profits (dividends) and have a say in how the company is run (voting rights). They are also liable for the company's debts if it should go bankrupt.

Single-Member LLC:
A single-member LLC is owned and managed by one individual, who can be an individual, corporation, or other entity. The single-member LLC is treated as a disregarded entity for tax purposes, meaning that all of the LLC's income and expenses are reported on the owner's individual income tax return.

Sole Proprietorship:
A sole proprietorship is a type of business structure in which a single individual is the sole owner, bearing full responsibility for all assets and liabilities. This type of business requires little to no paperwork and is easy to set up. The owner of a sole proprietorship has complete control over all decisions and operations, including pricing, hiring, and product selection. However, the owner is personally liable for all debts and legal obligations associated with the business.



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Virtual Office:
A virtual office for business use refers to a set of services and tools that enable businesses to operate without the need for a traditional physical office space. It provides a range of virtual and administrative support to help businesses establish a professional image, improve efficiency, and enhance flexibility. It can include a virtual address, mail handling services, and a virtual phone system to name a few.

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