A pass-through entity is a business whose owners claim the income on their own income tax returns based on their share of profits or losses.

Pass-through entities include:

• Disregarded entities, such as single-member limited liability companies (SMLLCs)
• Partnerships
• S corporations
• Limited Liability Companies (LLC) taxed as partnerships or S corporations

Pass-through entities generally do not pay income tax, but may be responsible for withholding tax on behalf of their owners or shareholders.

Some owners may elect to have the pass-through entity pay a composite tax on their behalf.