What entity type are you?

Sole Proprietor

A sole proprietor is someone who owns an unincorporated business by himself or herself. Uses own SSN

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• Taxation: Income or loss is passed through to the owner

Partnership

A partnership is a relationship between two or more people to do trade or business. Each person contributes money, property, labor or skill, and shares in the profits and losses of the business.

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• Taxation: The business is taxed as a partnership. Income or loss is passed through to the owners.

LLC

Limited Liability Company has different regulations based on the state opened in. LLC’s can have one member or many members. Depending on elections made by the LLC and the number of members, the IRS will treat an LLC as either a corporation, partnership, or as part of the LLC’s owner’s tax return

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• Taxation: Most small businesses start with pass-through taxation (the same as a sole proprietorship or partnership). The LLC may make a special election to be taxed as an S-Corp or C-Corp, which helps save on taxes as the business grows.

S-Corp

S corporations are corporations that elect to pass corporate income, losses, deductions, and credits through to their shareholders for federal tax purposes. 

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• Taxation: corporation is taxed as a pass-through entity (like a partnership)

C-Corp 

C corporation is recognized as a separate taxpaying entity. In informing a corporation, prospective shareholders exchange money, property, or both, for the corporation's capital stock. A corporation can take special deductions. A corporation conducts business, realizes net income or loss, pays taxes and distributes profits to shareholders.

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• Taxation: the corporation is taxed as a C-Corp. This results in double taxation of corporate profit and distributions to shareholders.

SET UP A FREE CONSULTATION IF YOU WOULD LIKE MORE INFORMATION ON TAX TREATMENT OF DIFFERENT ENTITIES AND WHAT IS BEST FOR YOUR BUSINESS