Why Form 1120 C Elect 2023-2024

Hi everybody, my name is Jared Elysia. Some know me as Mr. CPA, and as a CPA, I have a passion for helping small businesses. In this video, I'm going to discuss tax elections for businesses. If you're interested in starting a new business or you've already started a business, you'll want to follow along closely. So let's begin. Number one is not specifically a tax election, rather it's how a sole proprietorship or a single-member disregarded LLC would be taxed. Both of these types of businesses would be taxed directly on the owner's individual tax return using Schedule C. They would use Schedule C to report all of the year's business activity, including the profit and loss information. Again, this can only be used by single-owner businesses. Number two, partnerships, traditional partnerships, and multi-member LLCs are, by default, taxed as partnerships. They will report all of their business activity, including their profit and loss information, on Form 1065, which is considered a separate tax return by the federal government. Partnerships are also known as pass-through entities, meaning they themselves are not typically taxed. They pay no income tax; rather, the net result is passed through to the owners of the business. This is done through Schedule K-1, which is provided to each business owner at the time of filing. That information will then be used on that owner's personal income tax return to report their share of the profit or loss. Partnerships can also choose to change their tax election by filing the required paperwork with the IRS. The third is an S corporation. An S corporation is similar to a partnership in that it is a pass-through entity. So the business's profit or loss will flow through to each owner, similar to as it does in a partnership. Then, S corporation...