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Definition of S Corp - An "S-Corporation" is a regular corporation that has between 1 and 100

shareholders and that passes-through net income or losses to shareholders under in accordance with

Internal Revenue Code, Chapter 1, Subchapter S. Corporations must meet specific eligibility criteria, and

they must notify the IRS of their choice to be taxed as an S-Corporation within a certain period of time.

• Definition of C Corp - A regular corporation, sometimes called a "C" Corporation (after Subchapter C of the Internal Revenue Code), is taxed as a separate business entity. Corporations have their own tax form (1120) and their own tax rates (C Corp tax rates). Corporations may choose to retain their profits and earnings as part of their operating capital, or they may choose to distribute some or all of their profits and earnings as dividends paid to shareholders.  Dividends paid to shareholders are essentially taxed twice. • Definition of Partnership - Partnerships come in several different types. All partnership types have several common characteristics: 1. All partnerships consist of individuals who have agreed (with a partnership agreement) to run a business together. Each partner has invested in the business.  2. The partnership is a separate entity, but in most cases the partners have liability for the actions of the partnership. This arrangement differs from a corporation, which is separate from the owners. 3. The partners are not employees. The partners take money from the business as distributive shares, not salaries. 4. All types of partnerships pay income taxes by filing an information tax return on IRS Form 1065, with individual partner shares of the income or loss of the partnership reported on a Schedule K-1. • Definition of Franchise Tax - A franchise tax is charged by a state to corporations and other business entities (LLCs in some states), for the privilege of incorporating or doing business in that state. The franchise tax may be based on income or it may be an annual fee. If not based on income, it was based on net worth, capital stock, assets, capital or property, depending on the state.  Corporations are charged franchise taxes, but most states do not assess businesses which are not incorporated. • Definition of Trust - A trust is a legal agreement that has three parties to it: 1. Trustmaker - The person who creates the trust agreement, also commonly referred to as the Grantor, Trustor or Settlor. 2. Trustee - The person or entity responsible for managing the property that the Trustmaker decides to title in the name of the trust. 3. Beneficiary - The person or entity who is to receive the benefits of the property that is titled in the name of the trust. Under this type of legal arrangement, the Trustmaker will transfer ownership of certain assets to the Trustee who will manage the assets for the benefit of the Beneficiary.