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Richard
Richard, Tax Attorney
Category: Tax
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Experience:  29 years of experience as a tax, real estate, and business attorney.
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What are some common legal entities used for operating a business

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What are some common legal entities used for operating a business? What types of business entities does the U.S. tax system recognize? What are tax and nontax advantages of business entities recognized by the tax system?

Good evening...Here are the primary entities used in the U.S....

 

Sole proprietorship....no limited liability, single owner, owner pays tax by reporting operations on Schedule C of 1040.

 

Limited Liability company....limited liability, great flexibility, flow through entity---entity files return but doesn't pay tax--rather it is allocated to owners through K-1

 

S corporation ....pretty much identical to limited liability company, but a bit less flexibility regarding preferential distributions, allocations of income and losses, and classes of members

 

C corporation...limited liability...no flow through entity--pays its own tax

 

 

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The information given here is not legal advice. As all states have different intricacies in their laws, the information given is general only. This communication does not establish an attorney-client relationship with you. I hope this answer has been helpful to you.

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