S Corporation (S Corp)

An S corporation, also known as an S corp, is a type of business entity that is recognized under United States federal income tax law. S corporations are similar to regular corporations, or C corporations, in that they offer their owners limited liability protection and the ability to issue shares of stock. However, unlike C corporations, S corporations are not subject to corporate income tax. Instead, the income and losses of an S corporation are passed through to its shareholders and taxed at the individual level. This means that the shareholders of an S corporation are responsible for paying taxes on their share of the company's income, rather than the company itself. S corporations are typically small businesses with no more than 100 shareholders.