S corporation
In accounting, s corporation means a domestic corporation, or an LLC eligible to be treated as one, that has elected on Form 2553 to pass its income, losses, deductions and credits through to its shareholders. No more than 100 shareholders, all of them individuals other than nonresident aliens, estates, or certain trusts and exempt organizations, and one class of stock. Files Form 1120-S.
Also called S corp.
Authority: 26 U.S.C. §1361(b) (opens in a new tab). Sources
The lessons that teach this
From the free founder back-office course, taught on one company's books, with exercises to work it yourself.
- EntitiesThe entity menu › S corporationA tax election, not a company type: a corporation or LLC taxed as a pass-through, if it fits the eligibility rules.3 min
- EntitiesThe S corporation electionWho can elect, the Form 2553 deadline, reasonable pay, the $7,424.33 it saves a consultant — and why Northwind can't stay one after a round.10 min
- EntitiesUS companies for founders abroadNo S election, Form 5472 either way, a Delaware flip for companies formed abroad, and the EIN and ITIN from outside the US.6 min
- EntitiesChoosing an entity in practiceA decision table by goal — raise VC, bootstrap, consult, side project, real estate — and why Northwind is a Delaware C corporation.8 min
For founders
The same idea written for a founder: what it costs a startup that ignores it, and what to do in a real month.
What it is not called
Each of these means something else. Use one here and an accountant reading the product notices.
- a type of company (it is a tax election, not a state-law entity)
- small business
Also in Entity types
Defined in Lexicon. This page is generated from that document, so the two can't disagree.