What are the similarities between S-Corps and General Partnerships?
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.