Business Structure

Choose a business structure. The form of business determines which income tax return a business taxpayer needs to file. The most common business structures are:

  • Sole proprietorship: An unincorporated business owned by an individual. There’s no distinction between the taxpayer and their business. An example would be an Uber Driver
  • Partnership: An unincorporated business with ownership shared between two or more people. 
  • S Corporation: A corporation that elects to pass corporate income, losses, deductions, and credits through to the shareholders. An LLC has the option to be treated as an S-Corp. S-Corporations are not subject to self employment tax although they are required to pay owners a reasonable salary. 
  • Limited Liability Company: A business structure allowed by state statute. A single member LLC would file their business on their personal return. An LLC with multiple partners would file as a partnership.
  • Corporation: Also known as a C corporation. It’s a separate entity owned by shareholders.

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