S corporation

An S corporation is a corporation that has complied with certain federal tax laws and has elected to be taxed as a partnership, rather than as a corporation. S corporate status is preferred by some small businesses because the individual operators can apply the businesses losses to their personal income, and the double taxation problem faced by C corporations is avoided. In addition, the corporate form provides for limited personal liability for the business's contracts and torts. Restrictions on the number and type of shareholders and shares in a S corporation limit the entity's universal appeal: