Business Organization DC

Owner reports profit or loss on his or her personal tax return

Owners (partners) report their share of profit or loss on their personal tax returns

General partners can raise cash without involving outside investors in management of business

More expensive to create than general partnership

Suitable mainly for companies that invest in real estate

Fringe benefits can be deducted as business expense

Owners can split corporate profit among owners and corporation, paying lower overall tax rate

Paperwork can seem burdensome to some owners

Separate taxable entity

Owners report their share of corporate profit or loss on their personal tax returns

Owners can use corporate loss to offset income from other sources

More paperwork than for a limited liability company which offers similar advantages

Income must be allocated to owners according to their ownership interests

Fringe benefits limited for owners who own more than 2% of shares

Paperwork can seem burdensome to some owners

All owners must belong to the same profession

Contributions to charitable corporation are tax-deductible

Fringe benefits can be deducted as business expense

Property transferred to corporation stays there; if corporation ends, property must go to another nonprofit

Profit and loss can be allocated differently than ownership interests

IRS rules now allow LLCs to choose between being taxed as partnership or corporation

State laws for creating LLCs may not reflect latest federal tax changes

Gives state licensed professionals a way to enjoy those advantages

Members must all belong to the same profession

Owners (partners) aren't personally liable for the malpractice of other partners

Owners report their share of profit or loss on their personal tax returns

Not available in all states

Often limited to a short list of professions