Taxation Partnerships do not have to pay business taxes but instead the profits and losses are "passed

through" to the individual general partners, according to the U.S. Small Business Administration. Partnerships must file a tax return to report losses and profits to the Internal Revenue Service, and general partners include their share of profits and loss in the return. Corporations are required to pay state and national taxes, and shareholders must also pay taxes on their salaries, bonuses and dividends. The corporate tax rate is usually lower than the individual income tax rate, according to the SBA.