Questions and Answers
Which business entity type is owned and operated by a single individual?
What is a key advantage of forming a partnership?
In which business entity are the owners' personal assets most protected from business liabilities?
Which business entity type is known for having 'pass-through' taxation, where income is taxed only once at the individual level?
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What is a primary disadvantage of a C Corporation?
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What form must be filed to elect to be treated as an S Corporation?
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What is the due date for filing a partnership tax return?
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What form is used to file a nonprofit tax return?
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In a Partnership, what is the liability of each partner?
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Which type of Corporation is subject to double taxation?
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What is a key characteristic of a Sole Proprietorship?
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What is the term for the taxation method where profits are only taxed at the individual level?
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What is the primary reason business owners might choose to form a C Corporation?
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What form is used to elect to be treated as an S Corporation?
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When is the due date for filing a partnership tax return?
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What form is used to file a nonprofit tax return?
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What is a key advantage of forming a Partnership?
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What type of business entity provides pass-through taxation with shareholder limitations?
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A __________ is a business entity owned and operated by a single individual, with no distinction between the owner and the business.
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In a __________, two or more individuals share ownership, contribute resources, and share profits and losses.
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A __________ Corporation is subject to double taxation, where profits are taxed at both the corporate level and the shareholder level when distributed as dividends.
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An __________ Corporation provides pass-through taxation and has restrictions on the number and type of shareholders.
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The form used to elect to be treated as an S Corporation is __________.
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Study Notes
Business Entity Structures
- A Sole Proprietorship is a business entity owned and operated by a single individual, with no distinction between the owner and the business.
Types of Business Entities
- A Sole Proprietorship is owned and operated by a single individual.
- A Partnership is owned by two or more individuals sharing profits and losses.
- A C Corporation offers limited liability and potential for double taxation.
- An S Corporation provides pass-through taxation with shareholder limitations.
Key Features of Business Entities
- Sole Proprietorship: no limited liability protection, simple to set up and operate, no pass-through taxation.
- Partnership: offers limited liability protection, requires a formal agreement, pass-through taxation.
- C Corporation: offers limited liability protection, double taxation, potential for unlimited shareholders.
- S Corporation: offers limited liability protection, pass-through taxation, restrictions on shareholders.
Taxation of Business Entities
- C Corporation: subject to double taxation, profits taxed at corporate and shareholder levels.
- S Corporation: provides pass-through taxation, no corporate-level taxation.
- Partnership: provides pass-through taxation, no corporate-level taxation.
- Sole Proprietorship: no pass-through taxation, profits taxed at individual level.
Filing Requirements
- Partnership tax return: due on March 15th, filed using Form 1065.
- S Corporation tax return: filed using Form 1120S.
- Nonprofit tax return: filed using Form 990.
Other Key Facts
- A C Corporation is subject to double taxation, meaning profits are taxed at both the corporate level and again at the shareholder level when distributed as dividends.
- An S Corporation has restrictions on the number and type of shareholders.
- One key advantage of a Partnership is the ability to pool resources and share management responsibilities.
- Form 2553 is used to elect to be treated as an S Corporation.
Business Entities
- A sole proprietorship is a business entity owned and operated by a single individual, with no distinction between the owner and the business.
Partnerships
- In a partnership, two or more individuals share ownership, contribute resources, and share profits and losses.
Corporation Types
- A C Corporation is subject to double taxation, where profits are taxed at both the corporate level and the shareholder level when distributed as dividends.
- An S Corporation provides pass-through taxation and has restrictions on the number and type of shareholders.
Benefits of Partnerships
- One key advantage of a partnership is the ability to pool resources and share management responsibilities.
Tax Filing Forms and Deadlines
- The form used to elect to be treated as an S Corporation is Form 2553.
- The due date for filing a partnership tax return is April 15th.
- The form used to file a nonprofit tax return is Form 990.
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Description
Test your knowledge of different business entity structures, including sole proprietorships, partnerships, C Corporations, and S Corporations.
