Limited to the investment contributed to the business. Limited to the investment contributed to the business. Limited to the investment contributed to the business. Tax Treatment Profits are taxed at the individual income tax rate. and individual are also liable for self-employment tax. Corporate profits are subject to double taxation both as income to the corporation and as dividends distributed to stockholders.
Corporate profits are subject to personal income taxation.
The corporation itself does not pay taxes, but files an informational tax return mentioning each shareholder s portion of the corporate income. If only 1 member, the business profits are taxed as in the sole proprietorship. If at least 2 members, the business profits are taxed as in the partnership. The owner can either take an owner s draw or receive a reasonable salary. Depending on the partnership agreement, partners can receive a reasonable salary.