Fill out Schedule C when filing 1040 return
Advantages:
Easy to form
Property transfer is easy
Only one entity is taxed
Disadvantages:
Social Security tax is paid on all profit
Unlimited Liability (if you get sued they can take away your personal property)
Limited Resources (no investors)
File 1065
Taxed and treated like a partnership with all the partnership advantages and disadvantages.
File 1120 form
Person can be owner and employee of the company
Advantages:
Limited Liability
Only pay social security on wages you make
Can have fiscal year end
Disadvantages
Double Taxation (dividend taxed corporate and individual level)
Distributions are difficult
File 1065 form
General v.s. Limited: General Partnerships are liable for all debt. A Limited Partnership is liable for a certain amount of debt.
Pass through entity (entity does not pay taxes, partners are individually taxed)
Advantages:
Easy to form
Property transfer is easy
More resources are available (investors)
Disadvantages:
Social Security is paid on all profit
Unlimited Liability (if you get sued they can take away your personal property)
Joint and Several Liability (liable for all debts)
File 1120S
Taxed like a partnership
Advantages
No double taxation
Pass through entity
Cannot force corporation to distribute
Disadvantages
Taxation and distribution are tracked and could be very difficult
Must be calendar year