S Corp Definition
An S Corp is a type of business entity that allows owners or shareholders to avoid double taxation and enjoy limited liability.
S Corp Expanded Definition
Businesses operate as specific entities. Each entity or type of business offers pros and cons based on the purpose and function of the company. An S corporation, also known as S Corp, is an election made by a business that has decided to operate as a corporation.
By filing Form 2553, Election by a Small Business Corporation, with the Internal Revenue Service, the corporation can opt to be taxed as an S Corp. This provides a pass-through of profits or losses and allows the shareholders or owners to avoid being taxed twice.
Last Updated By
Rachel Blakely-Gray | Apr 18, 2023