S Corporation (S Corp) | Definition | Meaning | Example

In this video on S Corporation, here we discuss key features of S Corporation, along with its practical examples and advantages.

𝐖𝐡𝐚𝐭 𝐢𝐬 𝐒 𝐂𝐨𝐫𝐩𝐨𝐫𝐚𝐭𝐢𝐨𝐧 (𝐒 𝐂𝐨𝐫𝐩)?
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An S Corporation is one such category of business entity.The name is simply "small company". A company entity's structure or features help to differentiate it from other kinds.

𝐊𝐞𝐲 𝐅𝐞𝐚𝐭𝐮𝐫𝐞𝐬 𝐨𝐟 𝐒 𝐂𝐨𝐫𝐩𝐨𝐫𝐚𝐭𝐢𝐨𝐧
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#1 - The entity must be a "domestic corporation." A domestic corporation refers to an entity whose ownership can not include non-resident shareholders.

#2 - An entity must have less than or equal to 100 shareholders.

#3 - Trusts and estates that are considered as charitable organizations and receive tax exemptions and can be considered as shareholders.

#3 - Partnerships or other corporations cannot qualify as shareholders. Members of the family are treated in S Corp as a single shareholder.

𝐒 𝐂𝐨𝐫𝐩𝐨𝐫𝐚𝐭𝐢𝐨𝐧 𝐒𝐭𝐚𝐭𝐮𝐬 𝐌𝐞𝐚𝐧𝐢𝐧𝐠
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The "Internal Revenue System (IRS)," which is the only U.S. tax collection agency, imposes the Internal Revenue Code (IRC) on Corporations.

IRS categorizes corporations based on certain criteria for S corporation tax purposes.

𝐀𝐝𝐯𝐚𝐧𝐭𝐚𝐠𝐞𝐬 𝐨𝐟 𝐒 𝐂𝐨𝐫𝐩𝐨𝐫𝐚𝐭𝐢𝐨𝐧
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#1 - One of the significant benefits an S corporation enjoys is that it is not subject to income tax on income.

#2 - This is subject to partnership-like taxation in which all income or losses are shared between all its owners or shareholders.

To know more about 𝐒 𝐂𝐨𝐫𝐩𝐨𝐫𝐚𝐭𝐢𝐨𝐧 (𝐒 𝐂𝐨𝐫𝐩), you can go to this 𝐥𝐢𝐧𝐤 𝐡𝐞𝐫𝐞:-

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