When you are considering what type of business to select, consider how each business type pays income taxes. This article compares the types of businesses and explains how each type pays its income taxes.
A sole proprietorship is the simplest form of business in the U.S. If you are self-employed or you are an independent contractor, you are a sole proprietor, unless you have chosen to register as another form of business entity. Learn how to file your federal income tax return for your sole proprietorship.
Partnerships do not pay income tax directly; instead, the partners are taxed on their share of the income of the partnership. Learn about the forms and process for completing partnership tax returns for all types of partnerships.
A limited liability company is not recognized by the Internal Revenue Service as a taxing entity. Instead, an LLC is taxed as a sole proprietorship or partnership, depending upon the number of members of the company. Here are the details of how a single-member or multiple-member LLC pays income tax.
As a separate entity, a corporation pays income tax at the corporate tax rate. Learn about the corporate income tax filing process.
An S corporation is a type of corporation which pays taxes at the personal tax rate of the owner. Learn how an s corporation pays taxes, including forms and process.