What Are the Implications of Choosing a Business Structure?
The choice of business structure significantly impacts tax liability. For instance, sole proprietorships and partnerships are subject to pass-through taxation, where income is taxed at the individual level. In contrast, corporations are subject to double taxation—once at the corporate level and again on dividends. However, S Corporations and Limited Liability Companies (LLCs) can opt for pass-through taxation, potentially reducing overall tax burdens.