Glossary of Tax and Business Terms
1. Annual Report: A required document that corporations must submit annually to the state, detailing their financial performance and business activities over the past year.
2. Articles of Dissolution: Legal documents filed with the state to formally dissolve a corporation or LLC, ending its existence under state law.
3. Business License: A legal authorization issued by a governmental body that allows an individual or company to operate a business in the government’s geographical jurisdiction.
4. C Corporation: A legal structure for a corporation in which the owners, or shareholders, are taxed separately from the entity.
5. Capital Gains Tax: A tax on the profit made from selling certain types of assets, including stocks and real estate, which is considered taxable income.
6. Corporate Tax: A tax imposed on the net income of the company.
7. Deductions: Expenses that can be subtracted from gross income to reduce taxable income.
8. EIN (Employer Identification Number): Also known as a Federal Tax Identification Number, it is used to identify a business entity and often required for filing taxes.
9. Excise Taxes: Taxes paid when purchases are made on a specific good, such as gasoline.
10. Form 1040: The standard Internal Revenue Service (IRS) form that individuals use to file their annual income tax returns.
11. Form 1065: An IRS form used to report the profits, losses, deductions, and credits of a business partnership.
12. Form 1120: The U.S. corporate income tax return form used by C corporations.
13. Form 1120-S: A tax form used by S corporations to report their income, losses, and dividends to the IRS.
14. Form 2553: Used by corporations to elect S corporation status for federal tax purposes.
15. LLC (Limited Liability Company): A business structure that combines the pass-through taxation of a partnership or sole proprietorship with the limited liability of a corporation.
16. Partnership: A business structure in which two or more individuals manage and operate a business. Partners share the profits and responsibilities for managing the business.
17. Payroll Taxes: Taxes imposed on employers or employees, and are usually calculated as a percentage of the salaries that employers pay their staff.
18. Registered Agent: An individual or business designated to receive service of process notices and other government correspondence on behalf of a business entity.
19. S Corporation: A type of corporation that meets specific Internal Revenue Code requirements, offering the benefits of pass-through taxation while enjoying the limited liability of a corporation.
20. Schedule C: A tax form used by sole proprietors to report profits or losses from their business operations.
21. Self-Employment Tax: A tax consisting of Social Security and Medicare taxes primarily for individuals who work for themselves.
22. Sole Proprietorship: The simplest business form under which one can operate a business. It is not a legal entity and simply refers to a person who owns the business and is personally responsible for its debts.
23. Tax Credits: Amounts that can be subtracted directly from the tax owed to the government.
24. Tax Deduction: An expense that can be deducted from adjusted gross income in order to reduce the total taxes owed.
25. Tax Evasion: The illegal evasion of taxes by individuals, corporations, and trusts.
26. Tax Planning: The analysis and arrangement of a person’s financial situation to maximize tax breaks and minimize tax liabilities in a legal and efficient manner.
27. Withholding Tax: An amount that an employer withholds from employees’ wages and pays directly to the government as partial payment of income tax.
This glossary should help provide clear and concise definitions for common terms encountered when discussing taxes and business structures in the content we’ve created.
