On what are Aw's members required to report income and expenses?

According to Aw's 2025 Franchise Disclosure Document, the company has elected to be taxed as a limited liability corporation for federal and state income tax purposes. As a result, the income and expenses for Aw pass through directly to the members. Therefore, Aw's members are required to report the income and expenses on their individual income tax returns.

This pass-through taxation structure means that the profits and losses generated by the Aw franchise are not taxed at the corporate level. Instead, they are directly allocated to the individual members (franchisees) based on their ownership percentage or agreement. The franchisees then report these amounts on their personal income tax returns, where they are subject to individual income tax rates.

For a prospective Aw franchisee, this is an important consideration for financial planning. Franchisees will need to ensure they understand the tax implications of this structure and plan accordingly. They may need to make estimated tax payments throughout the year to avoid penalties. Additionally, they should consult with a tax professional to optimize their tax strategy and take advantage of any available deductions or credits.

This type of pass-through taxation is common for many limited liability companies and S corporations, as it avoids the double taxation that can occur with traditional C corporations (where profits are taxed at both the corporate level and again when distributed to shareholders).