Business Pass-Through Taxes

The business entity you select will determine whether there will be pass-through taxation. Partnerships, LLCs, and S corporations are examples of businesses that have pass-through taxes. In each of these forms of business, taxes are passed through to the owners, who then report the income or loss

Unlike a C corporation where there may be double taxation, since the corporation pays taxes as a separate entity, and any shareholder receiving dividends is also subject to tax, an LLC or S corporation can pass through profits or losses without paying any additional corporate taxes.

According to the IRS, in the case of a pass-through entity classified as a partnership, tax returns must be filed by the 30th day of the fourth month following the end of a pass-through entity's taxable year. In the case of a pass-through entity classified as an S corporation, tax returns must be filed by the 30th day of the third month following the end of such a pass-through entity's taxable year.