Learn how different types of businesses are taxed via the Massachusetts Department of Revenue (DOR).
Business types (LLCs, sole proprietorships, corporations, partnerships, etc.) are sometimes called “business structures” or “business subjects." You can find definitions and detailed information about taxes and payment schedules for each type.
A sole proprietorship is a basic business structure with one owner who has total control of the business. Personal assets and debts are not separate from the business, which increases liability. Sole proprietors must pay self-employment taxes.
Partnerships involve two or more people in a business. Legal risk and taxes are similar to sole proprietorships, unless partners choose to form an LLP (see below). Each partner is taxed on their share of the income.
Limited liability companies and partnerships (LLCs and LLPs)
An LLC or LLP is a business entity created by one or more people to provide legal protection for their personal assets. Members of an LLC are considered self-employed, and taxes can include personal, income, and corporate.
A corporation is its own legal entity with legal protection from business liabilities. Unlike an LLC, corporations can sell shares. S corps and C corps differ in how many times they're taxed.
