All businesses must pay tax on their income; that is, the business must pay tax on the profit of the company (the income of the business less deductible expenses). How that tax is paid depends on the form of the business. Small businesses (sole proprietors and single-member LLCs), partners in partnerships, and S- corporation owners pay taxes through their personal income tax returns. The concept - called pass- through tax - is the same for all of these business types. Sole proprietors and single-member LLC members pay taxes by filing a Schedule C included with their personal return Partners in partnerships and multiple-member LLC owners file a partnership business tax return for information purposes only. The individual partners or LLC members pay income taxes their share of the income of the business, by including this income in their personal returns.
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