Skip to content

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.

4.75 based on 60,000 + reviews on

S Corp FAQs

01

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.)

02

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.

03

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.

ready to take

the next step?