S Corp Definition

Short Definition

Businesses operate as specific entities. Each entity or type of business offers pros and cons based upon the purpose and function of the company. An S-corporation is an entity choice that allows owners or shareholder to avoid double taxation.

Expanded Definition

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 an additional 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.

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