Startup business owners must consider the legal and tax considerations associated with selecting a particular type of business structure. This is the third part of a series of blogs on the tax treatment of business entities. This blog will address the tax treatment of partnerships.
A partnership is an association of two or more persons who carry on a trade or business. Each partner shares in the profits and losses of the business enterprise, while contributing money, property, labor or skill to its operation.
When starting a business enterprise, one of the most significant and important decisions to make is the choice regarding the legal form to use in operating the business. The alternatives include sole proprietorship, partnership, corporation (C corporation), S corporation, and limited liability company (LLC). Startup business owners must consider the legal and tax considerations associated with selecting a particular type of business structure. This is the first part of a series of blogs on the tax treatment of business entities.
Unlike corporations which are treated as separate tax entities, the IRS and the Tax Code treat LLCs as “pass-through” entities. Thus, an LLC or “Limited Liability Company” is a business structure that combines the pass-through taxation of a partnership or sole proprietorship with the limited liability of a corporation. The IRS treats an LLC like a sole proprietorship or a partnership, depending on the number of members.
It’s no surprise that not every taxpayer timely prepares and files their taxes in any given year. Whether there are no funds available to pay the tax bill or there is simply insufficient time to prepare the return, a variety of reasons exist for this failure. However, a little information and foresight may alleviate the stress caused by the realization that a tax return will be untimely filed. The tax professonals at the Thorgood Law Firm can help any New York taxpayer deal with any looming tax deadline.