Definition: A legal form of business entity that is similar to a "C" or traditional corporation, in that shareholders are protected from the corporation's liabilities, but differs in that there may be no more than 75 shareholders, all of whom must be U.S. citizens.
Unlike a C corporation, the profits from the operations of an S corporation are passed through to the shareholders – the corporation itself is not taxed separately.
Like a C corporation, an S corporation must hold annual shareholder meetings and minutes of those meetings must be recorded.
Pronunciation: ess core pour ay shun
Also Known As: S corp, S company
Alternate Spellings: none
Common Misspellings: none
Examples:
I set up my home business as an S corporation because I didn't want the business to be taxed in addition to the personal taxes I have to pay on its income.
