Guide

Glossary: terms Chicago resellers need to know

Short, plain-English definitions with a link to the guide that covers each one.

General information only, not legal or tax advice. I am not a lawyer, a CPA or an accountant. Flipfiled does not prepare tax returns or give legal advice. This page explains what government sources say. Rules, rates and fees change, so confirm with the agency. The dollar examples are made up to show the math.

Short definitions for the terms used across Flipfiled. Each links to the guide that explains it. These are plain-English summaries. They are not legal or tax definitions.

1099-K

A form a payment platform or card processor may send you and the IRS showing payments you received for sales. 1099-K guide

1099-NEC

A form a business sends to the IRS and a contractor to report payments for services above a dollar threshold. Hiring help

Actual cash value (ACV)

Insurance term: replacement cost less depreciation. Compare with replacement cost. Insurance

Annual report (LLC)

A yearly filing with the Illinois Secretary of State that keeps your LLC in good standing. Annual report guide

Articles of Organization

The document you file with the Illinois Secretary of State to create an LLC. Forming an LLC

Assumed name (DBA)

A business name that is different from the legal name. Illinois uses “assumed name.” DBA means “doing business as.” Assumed name guide

BACP

The City of Chicago Department of Business Affairs and Consumer Protection, which handles business licenses. Chicago licenses

Business owner’s policy (BOP)

An insurance package that bundles property, liability and business income coverage for small businesses. It generally excludes workers’ compensation. Insurance

Certificate of good standing

A document from the Secretary of State showing your LLC is active and has filed what it should. Good standing

Commingling

Mixing personal and business money in the same account, which can create problems for an LLC and your records. Bank account guide

Cost of goods sold (COGS)

The cost of the items you actually sold, found from starting inventory plus purchases minus ending inventory. Overhead and COGS

CRT-61 (Certificate of Resale)

An Illinois form you give a supplier to show you are buying goods to resell, so you do not pay sales tax on them. CRT-61 guide

Deductible

The amount you pay out of pocket per insurance claim before the insurer pays. Insurance

Deduction

An amount you subtract from income before tax is figured. A deduction lowers taxable profit; it does not cancel the tax. Business expenses

EIN (Employer Identification Number)

A nine-digit number the IRS gives a business. It is free from the IRS. EIN guide

Endorsement

An add-on to an insurance policy that changes or extends coverage, such as raising a business-property limit. Insurance

Estimated tax

Payments made during the year toward income tax and self-employment tax when none is withheld from your income. Estimated taxes

FDIC insurance

Federal deposit insurance. The limit is $250,000 per depositor, per insured bank, per ownership category, as NerdWallet summarizes it. Bank guide

General merchandise

The category for most items resellers sell, as opposed to qualifying groceries, drugs or titled items. It has its own sales tax rate. Chicago rate

Gross profit

Net receipts minus cost of goods sold. Business expenses

Gross receipts

All the money your sales brought in, before subtracting anything. Business expenses

IDES

The Illinois Department of Employment Security. Employers register with it for unemployment insurance. Hiring help

IDOR

The Illinois Department of Revenue, which handles sales tax and state income tax withholding. Sales tax registration

IL-941

The Illinois quarterly withholding return employers file. Hiring help

IWCC

The Illinois Workers’ Compensation Commission, which oversees workers’ compensation insurance rules. Hiring help

Joint venture

Two or more people or businesses working together on a project or sharing a cost without necessarily merging. Joint ventures

Limited Business License (LBL)

A City of Chicago license for many general retail businesses, issued after zoning approval. Chicago licenses

LLC (limited liability company)

A business structure created by filing with a state. It can separate the business from its owners in some ways. What an LLC does

LLP (limited liability partnership)

A partnership that has taken steps to limit partners’ personal liability for the partnership’s obligations. LLPs and series LLCs

Marketplace facilitator

A platform, such as an online marketplace, that collects and remits sales tax on sales made through it, when it meets the state’s thresholds. Sales tax across state lines

MyTax Illinois

The Illinois Department of Revenue’s online system for registering, filing returns and paying. Filing the ST-1

Net receipts

Gross receipts minus returns and allowances. Business expenses

NITA

The Northern Illinois Transit Authority, formerly the RTA. Its sales tax layer rose 0.25 percentage point on August 1, 2026. Chicago rate

Operating agreement

The written rulebook owners create for an LLC. It is not filed with the state. Operating agreements

Ordinary and necessary

The IRS test for business expenses: common and accepted in your business, and helpful and appropriate for it. Business expenses

Overhead expenses

Costs like rent, utilities, insurance and depreciation. In some manufacturing situations they can be part of cost of goods sold. Overhead and COGS

Partnership

Two or more people carrying on a for-profit business together as owners. It can form even without a written agreement. Operating agreements

Pass-through

Income, losses and credits that flow from a business to its owners to be reported on their own tax returns. Schedule K-1

Reasonable compensation

The IRS requirement that an S corporation pay a shareholder-employee a fair wage for the work done. Paying yourself

REG-1

The Illinois form and online registration for business tax accounts, including sales tax. Registration

Registered agent

The person or company the state can use to deliver legal papers to your LLC. Registered agent

Replacement cost

Insurance term: the cost to repair or replace with like kind and quality, with no deduction for depreciation. Insurance

Resale certificate

A document a buyer gives a seller to show goods are bought for resale. In Illinois, the CRT-61. CRT-61 guide

Retailers’ Occupation Tax (ROT)

The Illinois tax on persons engaged in selling tangible personal property at retail. Commonly called sales tax. Chicago rate

Schedule C

The IRS form many one-owner businesses use to report profit or loss. Free forms

Schedule K-1

A form a partnership gives each partner showing that partner’s share of income, deductions and credits. Schedule K-1

Schedule SE

The IRS form used to figure self-employment tax. Estimated taxes

S corporation

A tax election available to some LLCs and corporations. Owners who work in the business must be paid reasonable wages. S corp vs LLC

Self-employment tax

The Social Security and Medicare tax people who work for themselves pay. The IRS rate is 15.3%. Estimated taxes

Series LLC

One LLC that creates separate series inside it, meant to keep each series’ assets and debts apart. LLPs and series LLCs

SKU

Stock keeping unit. A code you give each item or product type to track inventory. SKU system

ST-1

The Illinois Sales and Use Tax and E911 Surcharge Return that registered sellers file each period. Filing the ST-1

Use tax

A tax on items bought for use in Illinois when sales tax was not charged. It complements sales tax. Sales tax across state lines

Vendor’s discount

A small discount Illinois gives on sales tax if you file and pay correctly and on time. Filing the ST-1

W-9

An IRS form a business requests from a contractor or payee to get their name and taxpayer ID. Free forms

Workers’ compensation

Insurance that pays medical costs and lost wages for employees hurt on the job. Illinois requires it when you have employees. Insurance

I am not a CPA or an attorney

This glossary is general information, not legal or tax advice. Flipfiled does not prepare tax returns or give legal advice. Rules and definitions change, so confirm with the agency or a professional. Checked Oct 30, 2026.