If you are new to the business world, you may not be fully aware of what S corps and C corps are. You are not alone. Many are unfamiliar with these two basic types of corporations in America.
So why are these two corporation structures relatively unknown, and how are they important for you to understand as a business owner?
What is an S corp?
An S corporation is a business structure that alleviates companies of federal income taxes. This is done by “passing” the corporation’s income, losses and credits to the shareholders, which is then reported on each S corp shareholder’s tax returns. The “S” in the name stands for small.