Sole Proprietorship is treated as a pass-through entity, therefore the income of the business is reported on the owner’s personal tax return using IRS Form 1040, Schedule C.

The Partnership must issue each partner a K-1 and file an information return on IRS Form 1065 to report any credits or deductions to/from the operation of the business. Each partner must then report their portion of the profits and losses of the Partnership on their personal income tax return.

S-Corporation does not pay corporate income taxes, yet it is required to file a corporate income tax return using IRS Form 1120S. In addition, the S-Corporation must issue each shareholder a K-1 showing their share of any business profits or losses. Each shareholder must then report their portion of the profits and losses together with any compensation they have received on their personal income tax return.

A Corporation must file a corporate tax return on IRS Form 1120. Unlike with other business structures, the profits and losses of a Corporation are taxed directly and do not pass through to be claimed on the personal tax returns of the owners.
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