Browse Definitions:
Definition

S corporation (S corp)

Contributor(s): Ivy Wigmore

An S corporation (S corp) is a United States business that has filed for that status on the Internal Revenue Service form 2553. 

Like a C corporation, the S corp is considered a separate entity under the law. However, all of the profits and losses of an S corporation pass through to shareholders and must be reconciled on their individual tax returns. Shareholders are required to pay themselves what the IRS considers “reasonable compensation.” Failing that, the IRS can reclassify corporate earnings as wages 

The benefit of the S corp is that double taxation cannot occur, as it does for the C corporation. An S corp may also file for status as a limited liability company (LLC), which protects the private assets of shareholders.

To file as an S corp, a business must first register as a standard corporation. Once the corporation exists, all shareholders must sign form 2553. The S corp is defined under Subchapter S of the United States tax code, just as the C corp is defined under Subchapter C.

See also: business structure, sole proprietorship, partnership

This was last updated in December 2015

Continue Reading About S corporation (S corp)

Start the conversation

Send me notifications when other members comment.

By submitting you agree to receive email from TechTarget and its partners. If you reside outside of the United States, you consent to having your personal data transferred to and processed in the United States. Privacy

Please create a username to comment.

-ADS BY GOOGLE

File Extensions and File Formats

Powered by:

SearchCompliance

  • risk map (risk heat map)

    A risk map, also known as a risk heat map, is a data visualization tool for communicating specific risks an organization faces.

  • internal audit (IA)

    An internal audit (IA) is an organizational initiative to monitor and analyze its own business operations in order to determine ...

  • pure risk (absolute risk)

    Pure risk, also called absolute risk, is a category of threat that is beyond human control and has only one possible outcome if ...

SearchSecurity

  • FIDO (Fast Identity Online)

    FIDO (Fast ID Online) is a set of technology-agnostic security specifications for strong authentication. FIDO is developed by the...

  • cryptanalysis

    Cryptanalysis is the study of ciphertext, ciphers and cryptosystems with the aim of understanding how they work and finding and ...

  • Trojan horse (computing)

    In computing, a Trojan horse is a program that appears harmless, but is, in fact, malicious.

SearchHealthIT

SearchDisasterRecovery

  • business continuity and disaster recovery (BCDR)

    Business continuity and disaster recovery (BCDR) are closely related practices that describe an organization's preparation for ...

  • business continuity plan (BCP)

    A business continuity plan (BCP) is a document that consists of the critical information an organization needs to continue ...

  • call tree

    A call tree -- sometimes referred to as a phone tree -- is a telecommunications chain for notifying specific individuals of an ...

SearchStorage

  • SSD TRIM

    SSD TRIM is an Advanced Technology Attachment (ATA) command that enables an operating system to inform a NAND flash solid-state ...

  • cloud storage service

    A cloud storage service is a business that maintains and manages its customers' data and makes that data accessible over a ...

  • cloud hosting

    Cloud hosting is the process of outsourcing an organization's computing and storage resources to a service provider that offers ...

SearchSolidStateStorage

  • hybrid hard disk drive (HDD)

    A hybrid hard disk drive is an electromechanical spinning hard disk that contains some amount of NAND Flash memory.

Close