S Corporations and General Partnerships, possess the following 3 similar traits:
1. They both receive pass through tax treatment, for federal tax purposes.
This means, that both S Corps and General Partnerships, avoid double taxation which plagues C Corporations.
2. Both, were originally designed, to be used for small, mid-size and family owned businesses.
Businesses who have dreams of becoming publicly traded companies, or larger companies (i.e. those employing 20+ employees), are likely to form a C Corporation.
3. Both S Corps and Partnerships, have lost ground to LLCs, over the last 20 years.
LLCs have essentially become the entity of choice for most small, mom and pop type of businesses. However, S Corps and Partnerships, still possess many favorable features, for many mid size entities, and for many rapidly growing small businesses.
Additional resources provided by the author
1. Internal Revenue Code
2. U.S. Constitution – 16th Amendment
3. Practical Guide to Partnerships & LLCs 9th Edition, By Robert Ricketts & Lanny Tunnell
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