Definitions are written for US sellers, creators, and self-employed people — practical context first, regulatory citation second. Each entry links to the official source on irs.gov or the platform’s documentation. If a term isn’t here, email hello@payoutmath.com and I’ll add it.
1
1099-K
IRS form payment processors send when you cross $20,000 + 200 transactions in a year.
A 1099-K is issued by third-party payment settlement organizations (PayPal, Stripe, Square, Etsy, eBay, Amazon, etc.) when a payee receives more than $20,000 in gross payments AND more than 200 transactions in a calendar year. The threshold reverted to this level for 2025+ via the One Big Beautiful Bill Act, after a brief period when the threshold was set lower. State thresholds may differ — many states set lower thresholds, so you may receive a 1099-K from a state even if you don't hit the federal trigger.
C
CPA (Cost Per Acquisition)
Average cost to acquire one paying customer or qualified lead.
Performance-marketing metric: CPA = Total Ad Spend ÷ Conversions. The unit-economics test: CPA should be ≤30% of first-year customer revenue (rule of thumb), or paid back within 12-18 months including LTV. Different from CAC (Customer Acquisition Cost), which includes marketing AND sales costs (team salaries, tools, overhead). CPA is digital-marketing-narrow; CAC is fully-loaded.
CPC (Cost Per Click)
Average cost paid per click on a paid advertisement.
Dominant metric for paid search and lower-funnel performance campaigns: CPC = Ad Spend ÷ Clicks. US Google Search benchmarks: e-commerce $1-$5, B2B SaaS $5-$15, finance/insurance $10-$50, legal services $20-$100+. Meta Ads typical: $0.50-$2. LinkedIn: $5-$15. Quality Score (Google) and ad relevance (Meta) reduce effective paid CPC.
CPM (Cost Per Mille)
Cost per 1,000 ad impressions.
Awareness-stage metric: CPM = (Ad Spend ÷ Impressions) × 1,000. US benchmarks: Meta $7-$15, Google Display $2-$10, YouTube $7-$25 (huge variance by niche), programmatic $0.50-$5. CPM is most relevant when impressions matter (brand awareness). Performance campaigns use CPC or CPA instead.
CTR (Click-Through Rate)
Percentage of ad impressions that result in clicks.
Engagement metric: CTR = (Clicks ÷ Impressions) × 100. Benchmarks vary enormously by platform: Google Search 3-5% (10%+ for brand keywords), Display 0.5-1%, Meta feed 1-2%, email 2-3%. Used as a Quality Score input on Google Ads — higher CTR typically earns lower CPC and better ad position.
F
FICA
Federal Insurance Contributions Act — Social Security + Medicare payroll tax.
FICA is 15.3% combined: 12.4% Social Security (capped at the wage base, $176,100 for 2025 / $184,500 for 2026) + 2.9% Medicare (uncapped). Employees pay 7.65% via paycheck withholding; employers match. Self-employed pay the full 15.3% as Self-Employment Tax (Schedule SE), but get to deduct half from AGI. Above $200k single / $250k MFJ, an additional 0.9% Medicare tax kicks in.
R
ROAS (Return On Ad Spend)
Revenue earned per dollar of advertising spend.
A performance-marketing efficiency metric: ROAS = Revenue ÷ Ad Spend. $4 ROAS means $4 of revenue for every $1 spent. Healthy benchmark depends on margin: at 50% gross margin, breakeven ROAS is 2.0; above 4.0 is profitable. Different from ROI: ROAS measures revenue, ROI measures profit. US e-commerce typical ROAS targets: 3.0-5.0 prospecting, 8.0-12.0 retargeting.
S
Schedule C
IRS form sole proprietors use to report business income and expenses.
Schedule C (Form 1040, Profit or Loss From Business) is filed by sole proprietors, single-member LLCs (taxed as sole props), and freelancers to report net profit/loss from self-employment. The bottom line flows to Form 1040 as taxable income. If net profit is $400+, you also file Schedule SE for Self-Employment Tax. Common deductible expenses: home office, mileage, supplies, software, advertising, professional fees, contractor payments.
Self-Employment Tax (SE Tax)
15.3% on 92.35% of self-employment net profit (FICA equivalent for the self-employed).
Reported on Schedule SE. Calculated on 92.35% of net profit from Schedule C. Rate: 15.3% (12.4% Social Security on first $176,100 of 2025 SE earnings, 2.9% Medicare uncapped). Half is deductible from AGI (the "employer half" deduction). If net SE earnings are below $400, you don't owe SE tax. Additional 0.9% Medicare tax above $200k single / $250k MFJ.
Standard Deduction
Flat deduction reducing taxable income — $15,750 single / $31,500 MFJ in 2025.
2025 amounts (post-OBBB): $15,750 single, $31,500 married filing jointly, $23,625 head of household. 2026: $16,100 / $32,200 / $24,150. Increases each year for inflation. Most taxpayers take the standard deduction rather than itemize. Self-employment expenses (Schedule C) are deducted separately from the standard deduction — you can take both.