Browse Definitions :
Definition

S corporation (S corp)

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)

SearchCompliance
  • ISO 31000 Risk Management

    The ISO 31000 Risk Management framework is an international standard that provides businesses with guidelines and principles for ...

  • pure risk

    Pure risk refers to risks that are beyond human control and result in a loss or no loss with no possibility of financial gain.

  • risk reporting

    Risk reporting is a method of identifying risks tied to or potentially impacting an organization's business processes.

SearchSecurity
  • Pretty Good Privacy (PGP)

    Pretty Good Privacy or PGP was a popular program used to encrypt and decrypt email over the internet, as well as authenticate ...

  • cyberterrorism

    Cyberterrorism is often defined as any premeditated, politically motivated attack against information systems, programs and data ...

  • click fraud (pay-per-click fraud)

    Click fraud -- sometimes called 'pay-per-click fraud' -- is a type of fraud that artificially inflates traffic statistics for ...

SearchHealthIT
SearchDisasterRecovery
  • What is risk mitigation?

    Risk mitigation is a strategy to prepare for and lessen the effects of threats faced by a business.

  • fault-tolerant

    Fault-tolerant technology is a capability of a computer system, electronic system or network to deliver uninterrupted service, ...

  • synchronous replication

    Synchronous replication is the process of copying data over a storage area network, local area network or wide area network so ...

SearchStorage
Close