Which are the “passthrough” entities?
You have much control over whether the entity you choose is treated as a passthrough entity for federal tax purposes (see below), but the leading passthrough forms are general partnerships, limited partnerships, LLPs, LLCs, S corps, and sole proprietorships. If your business is in the form of a partnership (any type) or limited liability company, you may choose whether your business is treated for tax purposes as a corporation or a partnership (or, if you’re the only one in the LLC, as a corporation or disregarded for tax purposes). Tax and business advisors call this choice the “check-the-box” system. If it’s actually incorporated, or you choose to have it treated as a corporation, you may qualify to have it treated as a passthrough by electing S corp status. Your choice under check-the-box is binding. That is, if you choose one entity (say, corporation) in one year and another (say, partnership) the next year, you must pay tax as if you sold last year’s entity and put the proceeds in
