Glossary A - F
A
Abate: A term used when requesting that a government agency reverse or cancel a penalty charge.
Accrual: The accounting practice of recognizing assets, expenses, or revenues after their value is known but before cash is transferred.
ACH (Automated Clearing House): A system that serves as a central clearinghouse for electronic payment transactions like direct deposit.
ACH Credit: An electronic system where an employer initiates a credit against its bank account one day before a payment is due.
ACH Debit: A system where a company authorizes a debit against its bank account for payments such as payroll taxes.
Additional Medicare Tax: A 0.9% tax imposed on an employee's wages that exceed $200,000 in a calendar year.
Administrative Procedure: A method where support orders are enforced by an executive agency rather than a court.
Advance Earned Income Credit (AEIC): Payments made to employees during the year who expect to be eligible for the earned income credit.
Advice of Credit (AOC): A government form or coupon that indicates the amount of a federal tax deposit.
After-Tax Deduction: A deduction from pay, such as union dues, that does not reduce the employee's taxable wages.
B
Backup Withholding: A requirement to withhold 24% of certain payments if a payee fails to provide a correct Taxpayer Identification Number.
Base Period: The period of time used to establish a valid unemployment claim.
Beneficiary: An individual who receives earnings from a trust or estate.
Benefits: Non-wage compensation, such as health insurance or retirement plans, used to attract talent.
Biweekly Pay: A pay frequency where employees are paid every two weeks, totaling 26 pay periods a year.
Board of Advisors: A group of mentors or family members who provide business guidance for LLCs or sole proprietorships.
Board of Directors: A formal body required for S-Corporations to oversee strategy and maintain legal protection.
Bonuses: Financial incentives or recognition for high-performing employees.
Business Credit: A credit profile that helps early-stage businesses gain access to capital and build vendor credibility.
Business Plan: A document used to demonstrate financial projections and the ability to repay loans to investors.
C
Capital: The necessary funds required to grow and sustain a business.
C-Corp: A corporate structure where payroll taxes apply even when employing family members.
Certification: A formal statement on tax forms where the filer signs under penalties of perjury.
Child Tax Credit: A tax credit for parents with qualifying children under age 17.
Compliance: The act of adhering to State and Federal regulations regarding payroll, taxes, and labor laws.
Compensation Benchmarking: The process of comparing internal pay data to broader market trends to remain competitive.
Contractor: A worker (often called a "1099" worker) where the employer directs the result of work but not the methods used.
Corporate Veil: The legal protection of an entity that is strengthened by maintaining proper board records.
Cost-of-Living Analysis: A factor used by employers when setting pay ranges for various locations.
Credit Utilization: The ratio of credit used to credit available, which impacts a business's credit profile.
D
Deductions: Amounts subtracted from gross pay, including taxes, benefits, and garnishments.
Dependent: A qualifying individual for whom a taxpayer can claim certain tax credits.
Direct Deposit: The electronic transfer of a paycheck directly into an employee's bank account.
Disregarded Entity: A business (like a single-member LLC) that is not treated as separate from its owner for tax purposes.
Divestiture: The process of analyzing the disposal of a business's assets or segments.
Doing Business As (DBA): A trade name used by a business that is different from the owner's legal name.
Debit Entry: An electronic entry authorized to move funds out of an account for business obligations.
Data-driven Insights: Analytics used to substantiate proposed changes to pay or organizational structures.
DHS Standards: Regulations for the electronic generation and storage of Form I-9 documents.
Digital Tools: Software or apps that allow employees to manage their own financial information.
E
Earned Income: Income received from performing legitimate work, which is not subject to "kiddie tax".
Employer Identification Number (EIN): A unique nine-digit number used to identify a business for tax purposes.
Equity (Pay): The practice of paying comparable equal pay to employees with similar functions regardless of gender or race.
Employee Handbook: A document used to streamline onboarding and communicate workplace expectations.
Employee Withholding Certificate (Form W-4): The document used to determine the correct federal income tax withholding from pay.
Employment Eligibility Verification (Form I-9): A form used to verify the identity and work authorization of all new hires.
Estate Planning: Advanced financial strategies that may include employing family members to build wealth.
Exempt Employees: Workers who are not entitled to overtime pay under the Fair Labor Standards Act.
Experience Transfer: The movement of an unemployment history from one entity to another, affecting tax rates.
Estimated Tax: Periodic payments made to the IRS for income not subject to standard withholding.
F
Fair Labor Standards Act (FLSA): Federal law that establishes minimum wage, overtime pay, and recordkeeping standards.
Fair Wage: Compensation based on an employee's skills, experience, and the job’s market value.
FATCA (Foreign Account Tax Compliance Act): A law requiring the reporting of U.S. account holders in foreign financial institutions.
Federal Income Tax: Taxes withheld from an employee's pay based on their Form W-4 selections.
Federal Unemployment Tax Act (FUTA): A tax that applies to both regular and supplemental wages.
Filing Status: A category (such as Head of Household) that determines a taxpayer's standard deduction and tax rates.
Financial Projections: Forecasts that demonstrate a company's ability to provide a return on investment.
Flexible Work Schedules: A non-monetary perk used to promote work-life balance and retain talent.
Form 1099-NEC: The IRS form used specifically to report nonemployee compensation.
Form W-2: The annual Wage and Tax Statement that reports an employee's total annual remuneration.