An S corporation, or S corp, is a closely held corporation that makes a valid election to be taxed under Subchapter S of Chapter 1 of the Internal Revenue Code in the United States. S corporations do not pay any income taxes; instead, the corporation's income and losses are divided among and passed through to its shareholders, who must then report the income or loss on their own individual income tax returns
. S corporations are a type of legal business structure that pass their taxable income, credits, deductions, and losses directly to their shareholders, providing certain tax advantages over C corporations. They are available only to small businesses with 100 or fewer shareholders and are an alternative to limited liability companies (LLCs)
