Sole proprietorships are taxed as individuals, meaning that the profits and losses are reported on the owner's personal tax return. Partnerships are similar in that the profits and losses flow through to the individual partners and are reported on their personal tax returns. Corporations, on the other hand, are taxed separately from their owners, with the corporation itself paying taxes on its profits and the owners paying taxes on any dividends or salaries they receive. Additionally, corporations are subject to double taxation, with profits taxed at the corporate level and then again when distributed to shareholders as dividends.
