taxation

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taxation

Postby aparnna on Mon May 24, 2010 6:36 am

What does pass through taxation mean? I'm thinking of incorporatin and I'm trying to find out whether an S Corp or LLC would work best for me. But I'm not sure what pass-through taxation means.
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Last edited by aparnna on Sat May 29, 2010 6:42 am, edited 1 time in total.
aparnna
 
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Re: taxation

Postby Jon on Mon May 24, 2010 11:21 am

Then before you incorporate or form an LLC you should learn and understand the consequences of doing that.

They are legal entities and have some benefits, but they also require separate tax returns, franchise fees annually, and usually the submittal of an annual report to the state in which they were formed.

If you have a legitimate business purpose for one, it may protect your personal assets, but in the case of an aircraft ownership, if you are the pilot neither of those entities will offer any protection.

Pass through means that after all deductions for expenses are taken by the entity, the net profits (or loss) flow through to your personal tax return.
Jon
 


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