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Pass-Through Entity


A pass-through entity is a fiscally transparent entity.  This means that the entity itself does not receive income.  Instead, the income passes through the entity and is taxed to another person.  Pass-through entities include sole proprietorships, limited liability companies, partnerships, and S-corporations.  None of these entities pay business taxes (e.g., employment taxes) at the entity level, because all of the income passes through to the owner of the entity and is taxed as the owner’s income.