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S Corporations, Explained

Want to know more about S Corps, their pros and cons, how they compare to other entity types, and how to form one of your own? Here's everything you need to know.

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S Corp FAQs


What Does S Corporation Stand For?

Unfortunately, the "S" in S Corp doesn't stand for "Super" or "Splendid." Instead, it's referencing Subchapter S of the Internal Revenue Code. (We still think S Corps are super and splendid, though.)


Why Would You Choose an S Corporation?

Business owners may choose to form an S Corporation for a number of reasons, but the primary one is arguably the potential for reduced taxes. If you're not sure if you could save money by forming an S Corp, find out with our S Corp tax calculator.


How Does an S Corp Work?

As pass-through entities, S Corps work by passing their income (along with their losses, deductions and credits) on to its shareholders, thus avoiding the need to pay federal corporate tax altogether.

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