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What does sub s stand for?

Subchapter S corporations, or S corporations , are corporations that are taxed on a flow -through basis. This means that tax liabilities from income (or deductions from losses) are passed onto the corporations shareholders to be declared individually.

What is the difference between an LLC and a Subchapter S?

S corporations have restrictions on who can be a shareholder, as well as limits on the total number of shareholders (no more than 100, and they must be either US citizens or residents). LLCs have no such restrictions.

What is subchapter S tax status?

S corporations: S corps are pass-through taxation entities. They file an informational federal return (Form 1120S), but no income tax is paid at the corporate level. The profits/losses of the business are instead passed-through to the business and reported on the owners personal tax returns.

What is required for a subchapter S corporation?

To create an S corporation, a business must first be incorporated. It then must file Form 2553 with the IRS. This form is known officially as Election by a Small Business Corporation.