[Answer] Which of the following types of business ownership has the advantages of pass-through taxation and liability protection? (Select the best answer.)

Which of the following types of business ownership has the advantages of pass-through taxation and liability protection? (Select the best answer.)

A limited liability company (LLC) is the US-specific form of a private limited company.It is a business structure that can combine the pass-through taxation of a partnership or sole proprietorship with the limited liability of a corporation. An LLC is not a corporation under state law; it is a legal form of a company that provides limited liability to its owners in many jurisdictions.

Limited liability is offered for DSTs affording each trustee the benefit of personal asset protection . DSTs can be structured as a pass through entity so that any income will go straight to each individual trustee’s Form 1040 and state’s tax returns thus avoiding income tax at the entity level.

The sole trader receives all profits (subject to taxation specific to the business ) and has unlimited responsibility for all losses and debts. Every asset of the business is owned by the proprietor and all debts of the business are the proprietor’s. It is a ” sole” proprietorship in contrast with partnerships (which have at least two owners).

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