An S Corporation, or S Corp, is a unique legal structure for businesses in the United States. It combines the limited liability protection of a corporation with the tax advantages of a partnership or sole proprietorship. In an S Corp, business income and losses “pass through” to the shareholders’ personal tax returns, which means that the company itself does not pay federal income taxes.
One of the key benefits of choosing S Corp status is that it allows business owners to avoid double taxation, which is a common issue in traditional C Corporations. However, not all businesses are eligible for S Corp status, and there are specific requirements and limitations to consider. Consulting with a CPA can help you determine if an S Corp is the right choice for your business and ensure compliance with the necessary regulations.
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