Compliance Glossary
Plain-English definitions for the compliance terms every small business owner should know.
LLC (Limited Liability Company)
A business structure that protects owners from personal liability for business debts. One of the most popular structures for small businesses because it combines liability protection with tax flexibility.
DBA (Doing Business As)
A registration that allows a business to operate under a name different from its legal entity name. Also called a fictitious name, trade name, or assumed name.
EIN (Employer Identification Number)
A nine-digit number assigned by the IRS to identify a business for tax purposes. Required for businesses with employees, and often needed to open a business bank account.
FEIN (Federal Employer Identification Number)
Another name for EIN. The "Federal" prefix distinguishes it from state-level tax identification numbers.
Workers Compensation Insurance
Insurance that provides wage replacement and medical benefits to employees injured on the job. Required in most states for businesses with employees.
Unemployment Insurance (UI)
A state-administered insurance program funded by employer taxes. Provides temporary income to workers who lose their jobs through no fault of their own.
Franchise Tax
A state tax imposed on certain businesses for the privilege of operating in that state. Not related to franchising; the name refers to the "franchise" (right) to do business.
Annual Report
A required filing with the Secretary of State that updates your business information (address, officers, registered agent). Due dates and fees vary by state.
Registered Agent
A person or company designated to receive legal documents and official government correspondence on behalf of a business. Required in every state where you are registered.
Sales Tax Nexus
The connection between a business and a state that requires the business to collect and remit sales tax. Can be triggered by physical presence, employees, inventory, or exceeding economic thresholds.
Sales Tax Permit
A state-issued permit that authorizes a business to collect sales tax from customers. Must be obtained before making taxable sales.
S-Corporation
A tax election (not a business structure) that allows a corporation or LLC to pass income through to shareholders, potentially reducing self-employment tax.
C-Corporation
The default corporate structure. A separate legal entity that pays its own taxes. Subject to "double taxation" on profits (corporate tax) and dividends (personal tax).
Sole Proprietorship
The simplest business structure. The owner and the business are legally the same entity. Easy to start but offers no personal liability protection.
Partnership
A business structure where two or more people share ownership. Can be general (shared liability) or limited (some partners have limited liability).
Operating Agreement
A document that outlines the ownership structure, member roles, and operating procedures of an LLC. Not always legally required, but highly recommended.
Articles of Incorporation
The document filed with the state to officially create a corporation. Includes basic information such as business name, purpose, and registered agent.
Articles of Organization
The document filed with the state to officially create an LLC. Similar to Articles of Incorporation for corporations.
Business License
A permit issued by a government agency that allows a business to operate in a specific jurisdiction. Requirements vary widely by state, county, and city.
OSHA (Occupational Safety and Health Administration)
The federal agency that sets and enforces workplace safety standards. Most employers must comply with OSHA regulations and maintain safety records.
HIPAA (Health Insurance Portability and Accountability Act)
Federal law that establishes privacy and security standards for protected health information. Applies to healthcare providers, health plans, and their business associates.
ADA (Americans with Disabilities Act)
Federal law prohibiting discrimination against people with disabilities. Businesses open to the public must provide accessible facilities and services.
EEOC (Equal Employment Opportunity Commission)
The federal agency that enforces anti-discrimination laws in the workplace. Employers with 15 or more employees are subject to most EEOC-enforced laws.
FMLA (Family and Medical Leave Act)
Federal law requiring employers with 50+ employees to provide up to 12 weeks of unpaid, job-protected leave for qualifying family and medical reasons.
I-9 Employment Verification
A form used to verify the identity and employment authorization of every person hired in the United States. All employers must complete and retain I-9 forms.
Withholding Tax
The portion of an employee's wages that an employer sends directly to the government as a partial payment of the employee's income tax.
Payroll Tax
Taxes paid on employee wages, including Social Security, Medicare (FICA), and federal/state unemployment taxes. Both employers and employees share some of these costs.
Self-Employment Tax
The Social Security and Medicare tax paid by self-employed individuals. Currently 15.3% of net self-employment income (the employer and employee portions combined).
Good Standing
A status indicating that a business has met all state filing and tax requirements. Often required for loans, contracts, and operating in other states.
Certificate of Authority
A document issued by a state allowing a business formed in another state to operate there. Also called foreign qualification or registration.
BOI Report (Beneficial Ownership Information)
A report required by FinCEN that discloses the individuals who own or control a company. Required for most small businesses under the Corporate Transparency Act.
Compliance Audit
A review of a business's adherence to regulatory requirements. Can be internal (self-conducted) or external (by a government agency or third party).
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