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Questions and Answers
Which business entity type is owned and operated by a single individual?
Which business entity type is owned and operated by a single individual?
What is a key advantage of forming a partnership?
What is a key advantage of forming a partnership?
In which business entity are the owners' personal assets most protected from business liabilities?
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?
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?
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?
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?
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?
What form is used to file a nonprofit tax return?
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In a Partnership, what is the liability of each partner?
In a Partnership, what is the liability of each partner?
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Which type of Corporation is subject to double taxation?
Which type of Corporation is subject to double taxation?
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What is a key characteristic of a Sole Proprietorship?
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?
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?
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?
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?
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?
What form is used to file a nonprofit tax return?
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What is a key advantage of forming a Partnership?
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?
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.
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.
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.
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.
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 __________.
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.
