What are the tax benefits of a partnership compared to an LLC?

What are the tax benefits of a partnership compared to an LLC?

Partnerships typically have pass-through taxation, meaning profits are taxed at the individual level, avoiding double taxation. LLCs also offer pass-through taxation, but they can choose to be taxed as a corporation if beneficial.

Are there any specific deductions that partnerships can take that LLCs can't?

Both partnerships and LLCs can take similar deductions, but partnerships may have more flexibility in allocating income and losses among partners, which can be advantageous in certain situations.

What about self-employment taxes? How do they differ?

In a partnership, each partner is subject to self-employment taxes on their share of the income. In an LLC, if taxed as a partnership, members also pay self-employment taxes, but if taxed as a corporation, they may avoid some self-employment taxes.

Which structure is better for tax purposes?

It depends on your specific situation. Partnerships may offer more flexibility in income allocation, while LLCs provide liability protection and potential tax benefits if taxed as a corporation.