SMALL BUSINESS INCOME TAX
Small business income tax rules
How you structure your small business will affect your tax burden.
When individuals are responsible for small business income tax
The simplest small business structure is a sole proprietorship. For income tax, the sole proprietorship owner accounts for the money they made or lost in the business on their personal tax return.
A partnership, for which there are two or more owners, is considered a pass-through entity. Earnings and losses are passed through the company to the individual owners. Each individual in the partnership declares their earnings or losses as part of their personal income tax return.
A Limited Liability Company (LLC) structure protects the personal assets of its owners in the case of bankruptcy or lawsuits. The profits and losses of an LLC are passed through to the personal income tax returns of any owners.