S-Corporations (S-Corp)
01.S-Corp Tax Election
An S-Corp is not a distinct legal entity type, but a special tax election that an eligible LLC or C-Corp can file with the IRS (Form 2553) to enjoy pass-through taxation.
02.Self-Employment Tax Savings
Under an S-Corp, owners active in the business are treated as employees. They receive a reasonable salary (subject to FICA taxes) and can take the remaining profits as distributions (exempt from self-employment taxes).
03.Eligibility Limits
To qualify for S-Corp status, the company must have fewer than 100 shareholders, all of whom must be US citizens or resident aliens, and can issue only one class of stock.