Glossary G - L

Garnishment: A court-ordered post-tax deduction subtracted from an employee's wages to satisfy a debt.

General Excise Tax: A specific type of tax identified in the sources for businesses operating in Hawaii.

General Instructions: Reference guidelines provided by the IRS for completing various information returns.

Gains (Capital): Profit resulting from the sale of assets, which may require using the IRS tax withholding estimator to determine accurate tax liability.

Grantor Trust: A trust where the grantor is often also the trustee, requiring specific taxpayer identification rules for Form W-9.

Gross Pay: The total amount of money an employee earns before any deductions or taxes are subtracted.

Gross Receipts Tax: A tax imposed on the total revenue of a business, specifically noted as a requirement in Delaware and New Mexico.

Growth Capital: The funds necessary for an early-stage business to sustain operations and expand.

Guidance: Professional advice or strategies provided to help entrepreneurs navigate uncertainty and risk.

Green Card: A document used to verify the identity and employment authorization of permanent residents on Form I-9.

Head of Household: A tax filing status for unmarried individuals who pay more than half the cost of keeping up a home for a qualifying person.

Health Reimbursement Arrangement (HRA): A strategy that allows a business to deduct medical costs like co-pays and prescriptions, often used when a spouse is on the payroll.

Health Savings Account (HSA): A tax-advantaged account for individuals with high-deductible health plans; contributions are reported on Form 5498-SA.

Hiring: The critical process of defining roles and attracting top talent to build a strong team.

Human Capital Management (HCM): Comprehensive solutions that unite HR, payroll, talent, and tax administration into a strategic advantage.

Hourly Rate: The compensation basis for non-exempt workers, which is multiplied by hours worked to calculate gross pay.

Handbooks (Employee): A tool used to streamline onboarding and communicate workplace expectations and policies.

Health Insurance: A common employee benefit used to attract and retain talent, with costs often shared between employer and employee.

Home Office Expenses: Deductible costs for self-employed individuals who use a portion of their home exclusively for business.

High Turnover: A situation where employees leave a company frequently, which can significantly increase business costs.

Independent Contractor: A worker (often called a 1099 worker) where the employer directs the result of the work but not the methods used.

IRS (Internal Revenue Service): The federal agency responsible for tax collection and enforcement of tax laws.

I-9 (Form): The Employment Eligibility Verification form used to verify the identity and work authorization of all new hires.

Itemized Deductions: Specific expenses, such as mortgage interest or charitable gifts, that can be subtracted from income to reduce taxable wages.

Income Tax Withholding: The amount an employer takes from an employee's pay to cover federal and state tax obligations.

Incentives: Financial rewards, such as bonuses, used to recognize and motivate high-performing employees.

Incorporating: The legal process of forming a corporate entity to establish business credit and gain legal protection.

Interest: Income earned from bank accounts or the cost of borrowing funds, reportable on forms like the 1099-INT.

Internal Equity: A factor in pay transparency that involves ensuring fair pay across similar job functions within an organization.

Investment: Capital provided by venture capitalists or angel investors in exchange for a return on investment.

Job Description: A clear document used to attract candidates by defining the responsibilities of a position.

Joint Return: A tax return filed by married couples together, which impacts the standard deduction and tax rates.

Job Market Value: Data-driven information used by employers to determine competitive and fair wages.

Janitorial Work: An example of a legitimate task for which a business owner might pay a family member, such as a grandchild.

Job Responsibilities: One of the primary factors, along with education and experience, used to weigh and determine equitable pay.

Job Classification: The process of determining if an employee is exempt or non-exempt from overtime pay.

Job Posting: The advertisement of an open role, which may be legally required to disclose pay ranges in certain jurisdictions.

Job-Related Experience: A key metric used to substantiate pay decisions and maintain pay equity.

Job Titles: Categorizations used in people analytics to measure and track potential pay gaps.

Judgment: The professional or personal evaluation required when assessing risks before investing money.

Kiddie Tax: A tax on unearned income that can be avoided by paying children earned income for legitimate work in a business.

K-1 (Schedule): A tax document used to report a beneficiary's share of income, credits, and deductions from a trust or estate.

K-2 (Schedule): An IRS form used by partnerships to report items of international tax relevance.

K-3 (Schedule): An extension of the K-2 used to provide information to partners regarding foreign tax credits.

Key Area: One of the three pillars of business success—People, Credit Position, and Payroll—emphasized in the sources.

Keep Records: The essential bookkeeping practice of securely storing payroll, tax, and employee documents.

KKOS Lawyers: A professional service cited as a resource for entrepreneurs seeking strategic legal and tax planning.

Knowledge: The information and expertise passed down through generations in family-run businesses.

Keep Separate: The fundamental rule of maintaining distinct bank accounts for personal and business finances.

Key Talent: High-performing individuals or stakeholders essential for the growth of an early-stage company.

Labor Costs: The total expenditure on employee compensation and taxes, often monitored through management reports.

Legal Advice: Professional counsel that the sources note ADP does not provide, advising owners to contact their own attorneys.

Liabilities: Financial debts or obligations that are recognized in accrual accounting once the value is determined.

LLC (Limited Liability Company): A business structure that provides a "corporate veil" of legal protection for its owners.

Loan: A debt instrument, such as an SBA loan, used to provide capital for business growth.

Local Tax ID: A unique identification number required by state or local governments separate from a federal EIN.

Limited Liability Entity Tax: A specific tax mentioned in the sources for entities operating in Kentucky.

Legal Protection: The benefit of incorporating or forming a board to protect personal assets from business lawsuits.

Labor Laws: Regulations like the Fair Labor Standards Act that govern workplace standards and pay.

Lien Limits: Statutory restrictions on the amount of an employee's wages that can be attached for debt repayment.