Taxed as partnerships, they allow many types of owners, and provide limited personal liability. Family limited partnerships can also offer a number of benefits. They may allow you to split income with your children, realize estate tax savings, and continue to keep effective control over assets you transfer to the partnership. In a sole proprietorship, your personal tax return is your business tax return. But, if you risk substantial liability in your business, consider some form of incorporation, LLC or LLP, to protect your personal assets.
Shareholders pay tax on dividends.
Losses do not pass through to shareholders. Liability Shareholders are shielded from personal liability for business debts. Only their investment is at risk. Generally, no federal tax on the business entity. Income and expenses are allocated among shareholders.