For Beehive Homes, who is responsible for the income tax liability for 2022, 2023 and 2024?

According to Beehive Homes' 2025 Franchise Disclosure Document, because Beehive Homes, Inc. has elected to be taxed as an S Corporation, the income for the years 2024, 2023, and 2022 will be taxed to the shareholder as an individual, and not to the corporation itself. This means that the shareholder of Beehive Homes, Inc. is responsible for the income tax liability for those years.

This arrangement has significant implications for potential franchisees. As an S Corporation, the profits and losses of Beehive Homes, Inc. are passed directly to its shareholder(s), who then report them on their individual income tax returns. The document further clarifies that differences in accounting treatments between the financial statements and the company's tax return result in a deferred tax liability for the shareholder as an individual, which is not recognized by the company.

For a prospective franchisee, this information is crucial for understanding the financial structure of Beehive Homes. It indicates that the company's tax obligations are directly linked to its shareholder's personal income tax responsibilities. While this structure can offer certain tax advantages, it also means that the shareholder bears the direct responsibility for income taxes related to the company's performance during those years. This is a fairly common practice for smaller, closely held corporations, as it simplifies the tax process and avoids double taxation at the corporate level.

It is important for potential franchisees to consult with their own financial advisors to fully understand the tax implications of Beehive Homes' S Corporation status and how it might affect their investment and business decisions. Understanding the tax liabilities and financial structure of the franchisor is a critical part of due diligence before investing in any franchise.