LLC Limited Liability Company Pro and Con Analysis include being easy to form, protecting owners from personal liability, and offering flexible tax options.
S corporations are a flow-through entity is a legal entity where income flows through to investors or owners and treated as the income of the investor or owners.
Flow-through entities are also known as pass-through entities or fiscally-transparent entities. Depending on the local tax regulations, this structure can avoid dividend tax and double taxation because only owners or investors are taxed on the revenue. Technically, for tax purposes, S corporations flow-through entities are considered “non-entities” because they are not taxed; rather, taxation “flows-through” to another tax return.
Common types of FTEs are S corporations general partnerships, limited partnerships, and limited liability partnerships. In the United States, additional types of FTE include S corporations, income trusts and limited liability companies (LLC).
Most countries require an FTE (or its owners) to file an annual return reporting the shares of income allocated to owners, and to provide each owner with a statement of allocated income to enable owners to report their shares of income on their own tax returns. In the United States, the statement of allocated income is known as form K-1 (or Schedule K-1).
According to International Bureau of Fiscal Documentation (IBFD) a pass-through entity or flow-through entity (FTE) is a “non-taxable entity, such as a S corporations, partnership, under which the income or expense is generally regarded as income or expense of the participants under the transparency principle.” FTEs are based on conduit theory or pipeline theory which is defined as a “method of integrating the taxation at the entity and participator level under which income or deductions flow through from the entity to its participators. The entity is in effect regarded as an extension of the participators. A partnership is generally taxed according to the conduit system. The conduit system may be contrasted with the classical system.
Accountants Miami Year-end tax planning: Preparing for the tax cliff Accountants Miami can help clients cope with multiple tax hikes scheduled to take effect in 2013. Rarely has there been such a major difference between the laws in effect in one year and the next. The maximum income tax rates next year could be as …
Miami Accountants 5 Reasons to Be a C Corporation The entity choice for starting or operating a business can have a number of implications. It can affect funding, taxes, and more. Here are five compelling reasons Miami Accountants VieraCPA offer as to why you may want to run your business as a C corporation. 1. …