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

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