Today I am going to throw light on the Tax structures for business entities in US.
All types of business entities can be classified under the following structures for tax purposes:-
- Sole proprietorship: The business income and expenses are reported on the owner's personal tax return (Form 1040).
- Partnerships:The partnership itself does not pay taxes. Instead, it files an information return (Form 1065) to report income and expenses, while each partner receives a Schedule K-1 to report their share of profits and losses on their individual tax return.
- C-Corporations: Corporations are subject to corporate income tax on their profits (Form 1120). Shareholders are taxed on any dividends or distributions they receive from the corporation.
- S-corporations:Shareholders are taxed on any dividends or distributions they receive from the corporation.
