pass-through entities

Pass-through entities are business structures, like partnerships, LLCs, or S-corporations, where the company itself doesn't pay income taxes. Instead, the profits and losses are "passed through" directly to the owners or investors, who report them on their personal tax returns. This means the income is taxed only once, at the owner's individual level, avoiding the double taxation that can occur with corporations. Pass-through entities are often chosen for their simplicity and potential tax benefits, making it easier for owners to manage profits and losses directly.