Glossary
US LLC terms, in plain English.
The words you'll meet forming and running a US company — defined simply, with links to the full guides.
- Annual Report
- A yearly filing with your state to keep the LLC active. Wyoming charges a license tax (minimum $60); Delaware charges a flat $300 annual LLC tax. See annual compliance.
- Articles of Organization
- The document filed with the state to legally create an LLC. Delaware calls its version a "Certificate of Formation."
- Beneficial Owner / BOI Reporting
- An individual who ultimately owns or controls a company. Under FinCEN's March 2025 interim rule, US-formed LLCs (including foreign-owned ones) are currently exempt from Beneficial Ownership Information reporting; only foreign-formed entities registered in the US must report. Verify current status at fincen.gov/boi.
- C-Corporation
- A company taxed as its own entity (separate from its owners). Standard structure for startups raising US venture capital. See LLC vs C-Corp.
- Disregarded Entity
- A single-member LLC that the IRS treats as one and the same as its owner for tax — the LLC's income is the owner's. Still must file Form 5472 if foreign-owned.
- ECI (Effectively Connected Income)
- Income connected to a US trade or business, taxed at graduated rates after deductions. The concept that decides whether a non-resident owes US income tax. See ECI explained.
- EIN (Employer Identification Number)
- Your business's federal tax ID, issued free by the IRS. Non-residents can get one with no SSN via Form SS-4. See how to get an EIN.
- FDAP Income
- "Fixed, determinable, annual, or periodical" US-source passive income (interest, dividends, royalties, rent). Taxed at a flat 30% (or a lower tax-treaty rate) on the gross amount, usually via withholding.
- Franchise Tax
- An annual state tax to exist as a business there — separate from income tax. Every Delaware LLC owes a flat $300 per year.
- Form 1065 / Schedule K-1
- A multi-member LLC (taxed as a partnership) files Form 1065 and gives each owner a Schedule K-1 showing their share of income.
- Form 5472
- An information return a foreign-owned single-member US LLC must file (with a pro-forma Form 1120) each year. The penalty for missing it is $25,000. See the Form 5472 guide.
- Form SS-4
- The IRS application for an EIN. Non-residents enter "foreign" on line 7b where an SSN/ITIN would go.
- Form W-7
- The IRS application for an ITIN, for individuals who must file a US return but aren't eligible for an SSN.
- Good Standing
- A state's confirmation that your LLC is up to date on its filings and fees. Banks and payment processors may ask for a Certificate of Good Standing.
- ITIN (Individual Taxpayer Identification Number)
- A personal tax ID for individuals who need to file US taxes but can't get an SSN. Most non-resident LLC owners don't need one just to form an LLC. See ITIN vs EIN vs SSN.
- LLC (Limited Liability Company)
- A US business entity separate from its owners, combining liability protection with pass-through taxation. See how to form a US LLC.
- Member
- An owner of an LLC. An LLC can have one member (single-member) or several (multi-member).
- Member-managed vs Manager-managed
- Who runs the LLC: the members themselves (member-managed) or appointed managers (manager-managed). Most small LLCs are member-managed.
- Nexus
- A connection to a US state (sales, employees, property) strong enough to create tax obligations there — important for e-commerce sales tax.
- Operating Agreement
- The internal document setting out ownership percentages and how the LLC is run. Banks and Stripe often ask to see it.
- Pass-through Taxation
- The default for LLCs: the company itself generally pays no federal income tax; profits "pass through" to the owners' own tax situation.
- Permanent Establishment (PE)
- A tax-treaty concept — a fixed place of business (office, branch) in a country. For treaty-country residents, US business profits are generally taxed only if there's a US permanent establishment.
- Registered Agent
- A person or company with a physical address in your state of formation who receives legal and government mail for your LLC. Required in every state. See what a registered agent does.
- SSN (Social Security Number)
- A personal ID issued by the Social Security Administration to US citizens and authorized workers. Non-resident founders abroad aren't eligible — and don't need one to own a US LLC.