LEARN MORE ABOUT YOUR BUSINESS TYPE
Legally has no separate existence from its owner... Income and losses are taxed on the individual's personal income tax return. The sole proprietorship is the simplest business form under which one can operate a business. The sole proprietorship is not a legal entity.
A partnership is a business with multiple owners, each of whom has invested in the business. It is a legal form of business operation between two or more individuals who share management and profits. The partnership income tax is paid by the partnership, but the profits and losses are divided among the partners, and paid by the partners, based on their agreement.
Corporations are owned by their stockholders (shareholders) who share in profits and losses generated through the firm's operations, and have three distinct characteristics:
- Legal existence
- Limited Liability
- Continuity of existence
An S corporation, for United States federal income tax purposes, is a closely held corporation that makes a valid election to be taxed under sub-chapter S of Chapter 1 of the Internal Revenue Code. In general, S corporations do not pay any income taxes. Instead, the corporation's income or losses are divided among and passed through to its shareholders.
A limited liability company (LLC) is a corporate structure whereby the members of the company cannot be held personally liable for the company's debts or liabilities. Limited liability companies are essentially hybrid entities that combine the characteristics of a corporation and a partnership or sole proprietorship.
A nonprofit organization is a business granted tax-exempt status by the Internal Revenue Service (IRS). Donations made to a nonprofit organization are typically tax deductible to individuals or businesses that make them, but the nonprofits must make financial and operating information public so that donors are certain their contributions have been used effectively.
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