Pass-through entity

In accounting, pass-through entity means an entity whose income is taxed to its owners instead of itself — a partnership, an S corporationEntity typesS corporationA domestic corporation, or an LLC eligible to be treated as one, that has elected on Form 2553 to pass its income, losses, deductions and credits through to its shareholders. No more than 100 shareholders, all of them individuals other than nonresident aliens, estates, or certain trusts and exempt organizations, and one class of stock. Files Form 1120-S, a disregarded entityEntity typesDisregarded entityAn eligible entity with one owner that has not elected to be a corporation, ignored for income tax so its results go on the owner's return — Schedule C for an individual owner. It is still a separate legal entity, and still the employer for employment taxes. Each owner is taxed on their share of the income, which need not match the cash the entity pays out.