Reference

Licensing & compliance glossary

Every term used across our applications, lessons, and state-laws coverage, defined plainly. Each definition has a permanent URL so it can be linked or cited directly.

A

Additional insured: A party added to your policy so it shares the protection, common when a client or landlord requires it in a contract.
Annual report: A short filing most states require once a year to keep a business entity in good standing. Separate from a license renewal.

B

Bond amount: The most a surety will pay on a valid claim, set by the state or obligee that requires the bond. Also called the penal sum.

C

Certificate of authority: A state filing that lets a company formed in one state legally do business in another. Often a prerequisite for a state license.
Certificate of insurance: A one-page document proving you carry an active policy, with coverage types, limits, and dates. Clients and landlords often require one.
Collection agency license: A state license most debt collectors need before contacting consumers in that state. Many states require a surety bond before they issue it.
Control person: An owner, officer, or director with enough authority over a regulated entity that regulators want to vet them personally, often via background checks and disclosure forms.
Corporation: A business entity owned by shareholders and run by officers and directors. Regulators vet its officers, directors, and major shareholders.

D

Debt buyer: A company that purchases past-due accounts and collects on balances it now owns. Many states regulate debt buyers separately from agencies.
Deductible: The amount you pay out of pocket on a covered claim before the insurer pays the rest. A higher deductible usually lowers the premium.
Doing business as: A trade name a business uses other than its legal name. Often filed at the state or county level so the public knows who's behind the brand.

E

E&O insurance: Errors and omissions insurance. Protects a business when a professional service it delivered is alleged to have caused a client loss.

F

FDCPA: The federal Fair Debt Collection Practices Act. It governs how third-party collectors may contact consumers, on top of state collection licensing.
Fidelity bond: Different animal than a surety bond. Protects a business against employee theft or fraud. Not usually a licensing requirement.
Fingerprinting: Background check step required for many licenses, especially in lending, mortgage, and money transmission. Usually done through a state-approved vendor.

G

General liability insurance: Insurance for third-party bodily injury or property damage tied to your operations, plus related legal costs. It excludes employee injuries.
Good standing: A status confirming the business is current on its annual reports, taxes, registered-agent appointment, and any renewal filings.

I

Indemnity agreement: The contract a bond principal signs agreeing to repay the surety for any claim it pays. It is what makes a bond a guarantee, not coverage.

L

LLC: A business entity that blends pass-through taxation with limited owner liability and light formalities. Regulators vet its members as control persons.
License and permit bond: A surety bond a government agency requires before it issues a license or permit, guaranteeing the licensee follows the law governing the activity.

M

Mortgage loan originator: An individual licensed to take residential mortgage loan applications and negotiate terms. Licensed separately from the company they work for.

N

NMLS: The Nationwide Multistate Licensing System. The shared filing system used for most mortgage and consumer-finance license types across states.

O

Obligee: The party a surety bond protects. For a license bond it is the government agency that requires the bond and can claim against it.

P

Premium: What you pay for a surety bond or insurance policy. For a bond it is a fraction of the bond amount set by underwriting, not the full amount at risk.
Principal: The business whose performance a surety bond guarantees. The principal buys the bond and repays the surety for any valid claim it pays.
Professional liability insurance: Insurance for claims that your professional services or advice caused a client financial harm. Also sold as errors and omissions (E&O) coverage.

R

Registered agent: A person or company that accepts service of process and official mail on a business's behalf in each state where the business is registered.
Resident agent: A registered agent that physically resides in the state. Some states use this label instead of registered agent.

S

State license: A state-issued authorization for a regulated activity inside one state. Most regulated businesses need a separate license per state where they operate.
Surety: The company that issues a surety bond and backs the principal's obligation. It pays valid claims to the obligee, then collects repayment from the principal.
Surety bond: A three-party guarantee. The state requires the bond, the business buys it from a surety, and the state can claim against it if the business harms the public.

U

Underwriting: The review a surety or insurer runs to decide whether to issue a bond or policy and at what rate, weighing credit, financials, and experience.

W

Workers' compensation insurance: Insurance that pays medical bills and lost wages when an employee is hurt on the job. Most states require it once you have employees.