Glossary
Short, plain-English definitions of the terms that come up when founders in the US, Canada and Australia set up and run a US company.
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Form 1099-NEC
An IRS information return a US business files to report what it paid a US contractor (not an employee) for services. The threshold is $2,000 for payments made in 2026 ($600 before 2026), adjusted for inflation from 2027, and the form is due by January 31. Non-US contractors who give you a W-8BEN instead of a W-9 generally do not get one. See 1099 for foreign contractors and W-8BEN vs W-8BEN-E.
83(b) election
A written election filed with the IRS that lets you be taxed on restricted stock, such as founder shares that vest over time, when you receive it rather than as it vests. It must be filed within 30 days of the share transfer, and the deadline cannot be extended. Founders usually file one when the shares are worth very little. Relevant mainly to C-corp founders; see C Corp vs LLC for a startup.
ABN (Australian Business Number)
An 11-digit number issued by the Australian Business Register that identifies a business to the government and others. Overseas sellers often ask Australian buyers for an ABN to treat a purchase as business-to-business for GST. See Cursor pricing in AUD for an example.
Annual report (state)
A yearly filing many US states require to keep a company in good standing, usually confirming addresses and managers or officers and paying a fee. Rules differ: Wyoming LLCs file an annual report, while Delaware LLCs file no report and pay a flat annual tax instead. Compare them in Delaware vs Wyoming LLC.
Delaware flip
A restructure in which a new Delaware C-corp becomes the parent of an existing non-US company, usually through a share swap, so founders and investors end up holding shares in the US parent. It is common when US investors ask for a Delaware company, and it can have tax consequences in the founders' home country. See US company for Australian founders.
Single-member LLC (disregarded entity)
An LLC with one owner. By default the IRS disregards it for federal income tax, so its income and expenses are reported by the owner, unless it elects to be taxed as a corporation. It is still a separate legal entity under state law. A foreign-owned one must still file Form 5472 each year. See US LLC for non-residents.
EIN (Employer Identification Number)
The nine-digit federal tax ID the IRS issues to a business. You need one to open a US business bank account, file returns or hire, even with no employees. Non-US founders can get one without an SSN or ITIN by applying on Form SS-4 by phone, fax or mail. See EIN for non-US residents.
Foreign hybrid (Australia)
An Australian tax term for an entity, such as a US LLC, that Australia would treat as a company but its home country taxes as a partnership or flow-through. If the conditions in Division 830 of the Income Tax Assessment Act 1997 are met, Australia treats it as a partnership, so profits and losses flow through to the Australian owners. Get advice before relying on it; see US company for Australian founders.
Form 5472
An IRS information return that reports transactions between a company and its foreign owners or related parties, such as money put in or taken out. A US LLC with a single foreign owner files it every year, attached to a pro forma Form 1120, even with no income. The penalty for not filing starts at $25,000. See Form 5472 for foreign-owned LLCs.
Franchise tax
A state tax for the right to exist as a company in that state, owed whether or not the company makes a profit. In Delaware, corporations pay an annual franchise tax with their annual report, and LLCs pay a flat annual tax. See C Corp vs LLC for a startup and Delaware franchise tax penalties.
GST/HST (Canada)
Canada's 5% Goods and Services Tax and the Harmonized Sales Tax, which combines GST with provincial sales tax in participating provinces at 13% to 15%. Foreign sellers of digital services registered under Canada's rules charge it to Canadian consumers. Not the same as Australia's 10% GST. See Cursor pricing in CAD.
ITIN (Individual Taxpayer Identification Number)
A nine-digit IRS tax number for people who need one for US tax purposes but cannot get a Social Security number. You apply on Form W-7, usually with a tax return. You do not need an ITIN to get an EIN for your LLC. See EIN for non-US residents.
Pro forma Form 1120
A US corporate tax return used only as a cover sheet when a foreign-owned single-member LLC files Form 5472. The LLC fills in its name, address, EIN and a few required items, writes "Foreign-owned U.S. DE" across the top and attaches Form 5472; it does not calculate corporate tax. It is due April 15 for calendar-year companies. See Form 5472 for foreign-owned LLCs.
Registered agent
A person or company with a physical address in the state who accepts lawsuits and official mail for your company. Every state requires LLCs and corporations to keep one, so non-US founders usually pay a commercial registered agent service. See US LLC for non-residents.
SAFE (Simple Agreement for Future Equity)
An investment contract created by Y Combinator in which an investor pays now and receives shares later, usually at the next priced round, often with a valuation cap or discount. It is not debt: there is no interest and no maturity date. YC's post-money version from 2018 is the common one. See Post-money SAFE explained.
T1134 (Canada)
A CRA information return, Information Return Relating to Controlled and Non-Controlled Foreign Affiliates, filed by Canadian residents who hold foreign affiliates. Because the CRA treats a US LLC as a corporation, a Canadian who owns one usually files it, due 10 months after the end of the tax year. See T1134 for a US LLC.
T1135 (Canada)
The Foreign Income Verification Statement, filed by Canadian residents whose specified foreign property, such as foreign bank accounts or shares, cost more than CAN$100,000 in total at any time in the year. Shares of a foreign affiliate reported on T1134 are excluded. See US LLC for Canadians.
W-8BEN
An IRS form a non-US individual gives to a US payer, not to the IRS, to confirm they are not a US person and, where a treaty applies, claim a lower US withholding rate. A foreign individual who owns a single-member LLC usually gives this form in their own name, because the LLC is disregarded. See W-8BEN vs W-8BEN-E.
W-8BEN-E
The entity version of the W-8BEN: a non-US company, such as a Canadian corporation or an Australian Pty Ltd, gives it to a US payer to confirm foreign status, claim treaty benefits and state its FATCA status. Individuals must not use it. See W-8BEN vs W-8BEN-E.
About these definitions
Definitions are simplified and checked against official sources such as the IRS, the CRA and the ATO, as described in How we research. They are general information, not legal or tax advice; see the disclaimer. Spotted an error? Tell us.