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Pass Through Tax Entity

By IncNow | Published October 19, 2013

A Sole Proprietorship, Partnership, LLC (that has not made an election on Form 8832 to be taxed as a Corporation), or an S-Corporation in which corporate profits pass-through on the form K-1 to the owners on their personal income returns without a separate corporate tax. The entity avoids the double taxation of a C-Corporation in which the entity pays income tax on its profits and the owners also pay taxes on the dividends.

When deciding where to form your company, consider that Delaware has advantages over your home state that may benefit you. Go