TrustedLegal Glossary — Business & Legal Terms Explained

Another name for a Registered Agent — the person or service designated to receive legal documents, government notices, and official correspondence on behalf of your business. Required in every U.S. state for LLCs and Corporations.

Related: Registered Agent, Service of Process

A filing required by most states to keep your LLC or Corporation in good standing. Annual reports typically include your business address, registered agent information, and names of members or directors. Filing fees and deadlines vary by state.

TrustedLegal files annual reports in all 50 states. Learn more →

The document filed with the state to legally create a Corporation (C-Corp or S-Corp). Articles of Incorporation typically include the corporation’s name, purpose, registered agent, number of authorized shares, and incorporator information. Also called a Certificate of Incorporation in some states (e.g., Delaware).

Related: Articles of Organization, Corporation

The document filed with the state to legally create an LLC. Articles of Organization typically include the LLC’s name, principal address, registered agent, purpose, and management structure (member-managed or manager-managed). Also called a Certificate of Formation or Certificate of Organization in some states.

TrustedLegal prepares and files Articles of Organization in all 50 states. Form your LLC →

A business name different from the legal name on file with the state. Also called a DBA (Doing Business As), trade name, or fictitious name. Filing an assumed name lets you operate under a brand name without forming a new entity.

Related: DBA (Doing Business As)

A document that authorizes specific individuals to conduct banking transactions on behalf of a business. Banks require this when opening a business bank account. It identifies who can sign checks, make deposits, and manage the account.

TrustedLegal includes banking resolutions with every formation package. Get started →

The governing body of a Corporation elected by shareholders to oversee company strategy, hire officers, and make major business decisions. LLCs do not have a board of directors — they are governed by members or managers as defined in the Operating Agreement.

Related: Corporate Bylaws, Shareholder

A legal structure created to conduct business. Common entity types include LLCs, C-Corporations, S-Corporations, Sole Proprietorships, and Partnerships. The entity you choose determines your liability protection, tax treatment, and management requirements.

Not sure which entity is right for you? Read TrustedLegal’s comparison guide →

A permit issued by a government authority (federal, state, or local) that allows you to operate a business in a specific location or industry. Requirements vary by business type, location, and activities. Some businesses need multiple licenses.

See Corporate Bylaws below.

Related: Corporate Bylaws

A type of corporation taxed separately from its owners under Subchapter C of the Internal Revenue Code. C-Corps face “double taxation” — the company pays corporate income tax, and shareholders pay personal tax on dividends. However, C-Corps can retain earnings, offer stock options, and raise venture capital more easily than other structures.

Related: S-Corporation, Double Taxation

The term used in some states (e.g., Texas, Delaware) for Articles of Organization — the document filed with the state to form an LLC. The content and requirements are identical; only the name differs by state.

Related: Articles of Organization

An official document from the state confirming that your business is legally registered, has filed all required reports, and is authorized to conduct business. Banks, investors, and other states may request this document. Also called a Certificate of Existence or Certificate of Status.

A schedule of recurring filing deadlines, renewal dates, and reporting requirements that your business must meet to stay in good standing. Deadlines vary by state, entity type, and industry. Missing a deadline can result in penalties or administrative dissolution.

TrustedLegal Complete includes a compliance calendar with automated reminders. Learn more →

The internal rules governing how a Corporation operates. Bylaws cover shareholder meetings, board elections, officer appointments, voting procedures, amendment processes, and conflict resolution. Bylaws are not filed with the state — they are kept internally.

TrustedLegal offers an attorney-drafted Bylaws template. View template →

The legal separation between a business entity and its owners that provides personal liability protection. If you commingle funds, ignore corporate formalities, or fail to maintain your entity, a court may “pierce the corporate veil” and hold owners personally liable for business debts.

A registration that allows a business to operate under a name different from its legal entity name. For example, “Smith Holdings LLC” might file a DBA to operate as “Smith Consulting.” DBA requirements and filing processes vary by state and county.

Related: Assumed Name

The formal process of closing a business entity with the state. Dissolution involves filing dissolution documents, settling debts, distributing assets, canceling licenses, and filing final tax returns. Failing to formally dissolve can result in continued state fees and penalties.

A tax classification where a single-member LLC is treated as if it does not exist for federal tax purposes. The owner reports all income and expenses on their personal tax return (Schedule C). The LLC still provides liability protection — only the tax treatment is disregarded.

Related: Pass-Through Taxation, Single-Member LLC

A situation where corporate income is taxed twice — first at the corporate level (corporate income tax) and again when distributed to shareholders as dividends (personal income tax). Double taxation applies to C-Corporations. S-Corps and LLCs avoid this through pass-through taxation.

Related: C-Corporation, Pass-Through Taxation

A unique 9-digit number assigned by the IRS to identify your business for tax purposes. Also called a Federal Tax ID Number. An EIN is required to open a business bank account, hire employees, file business taxes, and apply for business credit. It functions as a Social Security Number for your business.

TrustedLegal includes EIN filing with every formation package — at no extra cost. Get started →

The legal classification of your business structure. Common entity types: LLC (Limited Liability Company), C-Corporation, S-Corporation, Sole Proprietorship, General Partnership, Limited Partnership (LP), and Nonprofit Corporation. Each has different rules for taxation, liability, management, and compliance.

A faster processing option offered by most states (for an additional fee) that accelerates the review and approval of formation documents. Standard filing takes 7–10 business days; expedited filing can reduce this to 1–3 business days or even same-day in some states.

TrustedLegal Complete includes expedited state filing. Learn more →

See EIN (Employer Identification Number).

Related: EIN

A legal obligation to act in the best interest of another party. In business, LLC managers owe fiduciary duties to members, and corporate directors owe fiduciary duties to shareholders. This includes the duty of care (informed decision-making) and the duty of loyalty (avoiding conflicts of interest).

The process of registering your LLC or Corporation to do business in a state other than where it was originally formed. If your business has a physical presence, employees, or significant revenue in another state, you typically need to foreign-qualify in that state.

A state tax imposed on businesses for the privilege of operating in that state. Not related to business franchising. States like Texas, Delaware, and California charge franchise taxes. The amount and calculation method vary by state — some are based on revenue, assets, or a flat fee.

A business structure where two or more individuals own and operate a business together, sharing profits, losses, and unlimited personal liability. Unlike LLCs and Corporations, general partnerships do not provide personal liability protection — each partner is personally responsible for all business debts.

A status indicating that your business has met all state requirements — including annual report filings, tax payments, and maintaining a registered agent. A business in good standing can operate, enter contracts, and obtain a Certificate of Good Standing. Falling out of good standing can lead to penalties or administrative dissolution.

A business entity created to own and control other companies rather than produce goods or services itself. Holding companies provide asset protection, tax planning flexibility, and organizational separation between operating businesses. Often formed as LLCs in Wyoming or Delaware.

The person who signs and files the Articles of Incorporation to form a Corporation. The incorporator’s role is typically limited to the formation process — once the corporation is created and the board of directors is appointed, the incorporator’s duties end.

A contractual obligation where one party agrees to compensate another for losses, damages, or liabilities. In business, indemnification clauses are common in operating agreements, service contracts, and employment agreements to allocate risk between parties.

A filing required by some states shortly after forming a business entity (typically within 30–90 days). The initial report provides the state with basic information about the new entity. Separate from the annual report, which is filed on a recurring basis.

A business arrangement where two or more parties agree to pool resources for a specific project or business activity while maintaining separate legal identities. Joint ventures can be structured as partnerships, LLCs, or contractual agreements. They are typically limited in scope and duration.

An IRS tax form used to report each owner’s share of income, deductions, and credits from a partnership, S-Corporation, or multi-member LLC. Each member or shareholder receives a K-1 and uses it to report their share of the business’s income on their personal tax return.

Related: Pass-Through Taxation

Legal protection that separates a business owner’s personal assets from business debts and lawsuits. If the business is sued or goes bankrupt, creditors generally cannot seize the owner’s personal home, savings, or other non-business assets. LLCs and Corporations both provide limited liability.

A business structure that combines the liability protection of a corporation with the tax flexibility and simplicity of a sole proprietorship or partnership. LLCs are the most popular entity type for small businesses in the United States. Owners are called “members” and can choose how to be taxed (sole proprietorship, partnership, S-Corp, or C-Corp).

TrustedLegal forms LLCs in all 50 states from $99. Form your LLC →

A partnership with at least one general partner (who manages the business and has unlimited liability) and one or more limited partners (who invest capital but have limited liability and no management role). Common in real estate and investment structures.

An LLC structure where one or more designated managers (who may or may not be members) handle day-to-day operations and decision-making. Non-managing members are passive investors. This structure is common when some LLC members prefer not to be involved in daily management.

Related: Member-Managed LLC, Operating Agreement

An owner of an LLC. Members can be individuals, other LLCs, corporations, or trusts. A single-member LLC has one owner; a multi-member LLC has two or more. Members’ rights and responsibilities are defined in the Operating Agreement.

An LLC structure where all members participate in the day-to-day management and decision-making of the business. This is the default management structure in most states and is the most common choice for small LLCs.

Related: Manager-Managed LLC

Written records of decisions, votes, and discussions that take place during formal business meetings (board meetings, shareholder meetings, member meetings). Keeping minutes is a corporate formality that helps maintain your corporate veil and demonstrates proper governance.

TrustedLegal offers a Meeting Minutes template. View template →

A filing with the state that temporarily reserves a business name (typically for 60–120 days) before you officially form your entity. Useful if you need time to prepare your formation documents but want to secure your preferred name.

A legally binding contract that prohibits one or both parties from sharing confidential information. NDAs protect trade secrets, business plans, client lists, and proprietary information. They can be mutual (both parties bound) or one-way (only one party bound).

TrustedLegal offers an attorney-drafted NDA template. View template →

A corporation organized for a purpose other than generating profit — such as charitable, educational, religious, or scientific purposes. Nonprofits can apply for 501(c)(3) tax-exempt status from the IRS. Unlike standard corporations, nonprofits cannot distribute profits to members or directors.

A person appointed by the board of directors to manage the day-to-day operations of a Corporation. Common officer positions include CEO (Chief Executive Officer), CFO (Chief Financial Officer), President, Secretary, and Treasurer. Officers are agents of the corporation with defined authority.

An internal document that outlines how an LLC is managed, including ownership percentages, profit distribution, voting rights, member roles, and procedures for adding or removing members. While not always required by state law, an Operating Agreement is essential for protecting your limited liability status and preventing disputes.

TrustedLegal includes an Operating Agreement with every formation package. Get started →

The person who signs and files the Articles of Organization to form an LLC. Similar to an incorporator for corporations. The organizer’s role is typically limited to the formation process.

A tax structure where business income “passes through” to the owners’ personal tax returns rather than being taxed at the entity level. This avoids double taxation. LLCs, S-Corporations, and Partnerships all use pass-through taxation by default.

Related: Double Taxation, K-1 (Schedule K-1)

A legal action where a court disregards the liability protection of an LLC or Corporation and holds owners personally responsible for business debts. This can happen if owners commingle personal and business funds, fail to maintain corporate formalities, undercapitalize the entity, or engage in fraud.

Related: Corporate Veil, Limited Liability

The primary business address where a company’s main operations or management activities are conducted. This address is typically listed on formation documents and must be kept current with the state.

A specialized type of LLC available in some states for licensed professionals such as doctors, lawyers, accountants, and architects. PLLCs provide limited liability protection while complying with state licensing board requirements.

The minimum number of members, directors, or shareholders required to be present (in person or by proxy) before a meeting can officially conduct business. Quorum requirements are defined in the Operating Agreement (for LLCs) or Corporate Bylaws (for Corporations).

A person or service designated to receive official legal and government documents — including lawsuits, tax notices, and state correspondence — on behalf of your business. Every U.S. state requires LLCs and Corporations to maintain a Registered Agent with a physical street address in the state of formation.

TrustedLegal offers Registered Agent service in all 50 states — included with the Complete package. Learn more →

The official address on file with the state where your Registered Agent is located. This must be a physical street address (not a P.O. Box) in the state of formation. The registered office is where legal documents will be delivered.

The process of restoring a business entity that has been administratively dissolved or revoked by the state due to non-compliance (missed filings, unpaid fees, etc.). Reinstatement typically requires filing back reports, paying penalties, and bringing all obligations current.

A tax election available to eligible corporations and LLCs under Subchapter S of the Internal Revenue Code. S-Corps provide pass-through taxation (avoiding double taxation) while allowing owners who work in the business to potentially reduce self-employment taxes by splitting income between salary and distributions.

Related: C-Corporation, Pass-Through Taxation

A specialized LLC structure (available in some states like Delaware, Illinois, and Nevada) that allows a single LLC to create separate internal “series,” each with its own assets, liabilities, and members. Each series is legally shielded from the liabilities of other series within the same LLC.

The formal delivery of legal documents (such as a lawsuit or subpoena) to a party involved in a legal proceeding. Your Registered Agent receives service of process on behalf of your business, ensuring you are properly notified of any legal actions.

An individual or entity that owns shares (stock) in a Corporation. Shareholders elect the board of directors, vote on major corporate matters, and receive dividends when declared. In an LLC, the equivalent term is member.

An LLC with only one owner (member). By default, a single-member LLC is treated as a disregarded entity for federal tax purposes — meaning all income is reported on the owner’s personal tax return. The LLC still provides liability protection.

Related: Disregarded Entity, Member

The simplest business structure where an individual operates a business without forming a separate legal entity. Sole proprietorships offer no personal liability protection — the owner is personally responsible for all business debts and lawsuits. Most businesses benefit from forming an LLC instead.

The fee charged by the state to process your business formation documents. State fees vary by state and entity type, typically ranging from $50 to $500. This fee is paid to the state in addition to any service fees from TrustedLegal.

A choice made by a business entity about how it wants to be taxed. For example, an LLC can elect to be taxed as a sole proprietorship, partnership, S-Corp, or C-Corp by filing the appropriate forms with the IRS. The S-Corp election (IRS Form 2553) is the most common election for small business LLCs.

A word, phrase, logo, symbol, or design that identifies and distinguishes the goods or services of one business from another. Trademarks can be registered at the federal level (through the USPTO) or at the state level. Federal registration provides nationwide protection.

TrustedLegal offers trademark filing services. Learn more →

The ability to transfer ownership interests in a business entity. In Corporations, shares can generally be transferred freely. In LLCs, transfer of membership interests is typically restricted by the Operating Agreement and may require approval from other members.

A decision-making method where all members, directors, or shareholders must agree before an action is taken. Some Operating Agreements and Bylaws require unanimous consent for major decisions like admitting new members, selling the business, or amending governing documents.

Forming or operating a business without sufficient funding to cover foreseeable expenses and liabilities. Courts may use undercapitalization as grounds for piercing the corporate veil and holding owners personally liable for business debts.

Related: Piercing the Corporate Veil

See Piercing the Corporate Veil.

Related: Piercing the Corporate Veil, Corporate Veil

The right of members (in an LLC) or shareholders (in a Corporation) to vote on business matters such as electing directors, approving mergers, amending governing documents, or dissolving the entity. Voting rights and procedures are defined in the Operating Agreement or Corporate Bylaws.

The process of settling a business’s affairs before final dissolution. Winding up includes collecting debts owed to the business, paying creditors, distributing remaining assets to members or shareholders, canceling permits and licenses, and filing dissolution paperwork with the state.

Related: Dissolution

A method of approving business decisions without holding a formal meeting. Members or directors sign a written document (a “written consent” or “action by written consent”) indicating their approval. Permitted by most state laws and commonly used by small businesses to streamline governance.

TrustedLegal offers a Written Consent Resolution template. View template →

The requirement that your business location and activities comply with local zoning laws — regulations that dictate how land and buildings can be used in a given area (residential, commercial, industrial, mixed-use). Operating a business in a zone that prohibits commercial activity can result in fines or forced closure.