An S-Corporation is a closely held corporation that makes an election to be taxed under Subchapter S of the Internal Revenue Code. This means that S-Corps elect to pass corporate income, losses, deduction, and credits through to their shareholders for federal tax purposes. Shareholders of S-Corporations report the flow-through income and losses on their personal tax returns and are assessed a tax at their individual income tax rates, therefore S-Corps avoid double taxation on the corporate income.
Overall, S-Corps are better for smaller corporations with a maximum threshold of 100 shareholders. Regarding voting rights, the owners of S-Corps only get common stock. Some of the benefits of the S-Corp are that the owners are not personally liable for business liabilities and the shareholders are only taxed once, meaning they pay on profits received.
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