Kayla Nguyen

Mentor Visit

28 January 2020

Evidence of Learning #2

In my second mentor visit, I was exposed to the different business entities that one would

have to file as when beginning their own business. The five that I learned were sole proprietor,

partnership, C and S corporation, and LLC. My mentor provided me with a chart comparison and

discussed some of the factors and characteristics of each of the entities.

For example, a C corporation is a standard corporation under IRS rules, whereas an S

corporation is a corporation that has elected a special tax status with the IRS and therefore there

are some tax advantages. C corps are separately taxable entities and file a Form 1120, which is a

corporate tax return. S corps are pass-through tax entities which file a Form 1120S, which is an

informational federal return; the profits and/or losses are reported on the owner’s personal tax

return.

A sole proprietor is a business that is owned and run by an individual who is entitled to

all the profits, losses, liabilities, debt, etc. and is responsible for withholding and paying all

income taxes. Some examples of sole proprietors in everyday life are freelance writers, bakers,

tutors and private lesson teachers, etc. In terms of tax, these businesses report their income/losses

with a Schedule C and a default Form 1040.