Which are the "pass-through" entities?

You have much control over whether the entity you choose is treated as a pass-through entity for federal tax purposes (see below), but the leading pass-through forms are general partnerships, limited partnerships, LLPs, LLCs, S-corps, and sole proprietorships. 

If your business is in the form of a partnership (any type) or limited liability company, you may choose whether your business is treated for tax purposes as a corporation or a partnership (or, if you're the only one in the LLC, as a corporation or disregarded for tax purposes). Tax and business advisors call this choice the "check-the-box" system. If it's actually incorporated, or you choose to have it treated as a corporation, you may qualify to have it treated as a pass-through by electing S-corp status.

Your choice under check-the-box is binding. That is, if you choose one entity (say, corporation) in one year and another (say, partnership) the next year, you must pay tax as if you sold last year's entity and put the proceeds into this year's.

  • 0 أعضاء وجدوا هذه المقالة مفيدة
هل كانت المقالة مفيدة ؟

مقالات مشابهة

Which kinds of business organization or business entity will limit my liability to business creditors?

Corporations, limited liability companies (LLCs), limited partnerships, and limited liability...

What is the "corporate double tax" and how can it be avoided?

Double taxation of corporations results in a significant tax burden on corporate income. Often...

Which types of business entity are best for tax purposes?

It depends. Generally speaking, the "pass-through" type of entity saves tax overall by...

What entities will let me both limit my liability and avoid the double tax?

S-corps (usually) and all of the following, assuming that you don't choose to have them treated...

What's so great about limited liability companies (LLCs)?

LLCs combine limited liability with pass-through tax treatment. They can offer benefits...