Pass-through (or “flow thru”) taxation exists when owners of applicable types of business entities pay taxes on the business profits in their personal tax return forms.
A limited liability company (LLC) is a business structure that combines the pass-through taxation of a partnership with the limited liability of a corporation.
A limited partnership is a partnership consisting of a general partner, who manages the business and has unlimited personal liability for the debts and obligations of the partnership, and one or more limited partners, who have limited liability but cannot participate in management.
The most common form of corporation; C Corporations (or C-Corps) are subject to tax at the corporate level.
The following chart lists some principal considerations in selecting the form of business entity and applies them to the C corporation, S corporation and limited liability company (“LLC”) entity forms….
An “S election” is the process by which a company designates itself as an S Corporation. S Corporations generally do not pay federal income tax but pass the tax liability for their profits through to their stockholders.
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