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Business Entity Types and Taxes Intro

The IRS determines how a business should be taxed (and what forms it must file) by examining its number of owners, and how they share ownership of the business. In general, owners for the majority of these entity types are considered self-employed individuals by the IRS and are unable to participate in cafeteria plans such as FSA or Commuter plans.

Definition of a (C) Corporation

Corporations (also known as C Corporations to disambiguate them from S Corporations) are business entities formed and jointly owned by a group of shareholders through stock.... Learn more

Definition of an S Corporation

S Corporations are a special class of corporations whose income is not taxed at the business level. Instead, the individual shareholders in the S Corp are responsible for pa... Learn more

Definition of a Partnership

Partnerships are businesses formed between two or more individuals (partners). These partners are not shareholders instead share ownership of the partnership. Like S Corpora... Learn more

Definition of a Sole Proprietorship

A sole proprietorship is a business owned entirely by a single person. The owner of a sole proprietorship is subject to self-employment taxes, and will report Federal... Learn more

Definition of a Limited Liability Company (LLC)

A Limited Liability Company is a hybrid of a corporation and a partnership (if multiple owners) or sole proprietorship (if one owner). An LLC can have more than one owner, a... Learn more

Definition of a Limited Liability Partnership (LLP)

An LLP has more than one partner, and is a hybrid between a partnership and an LLC. The difference from an LLC is that each partner in an LLP is not only shielded from the c... Learn more

Section 125 and Company Ownership

In general, most business owners are ineligible for participation in a Section 125 cafeteria plan (e.g., FSA, Commuter benefits) because these owners are considered self-employe... Learn more

Taxation for LLCs

When a business is formed as an LLC, its members must also decide its tax classification, which is how they'd like the IRS to treat it for tax purposes. For example, LLCs cl... Learn more

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