S corporation: Advantages and disadvantages

…In order to understand how S-Corporations work,…make sure you have watched the previous video about C-Corporations.…An S-Corporation is a C-Corporation that has selected to be…taxed as a small business corporation, by filing the IRS Form 2553.…Only domestic corporations with less than 100 shareholders qualify to…be selected as S-corporations.…So I sometimes think of the S as small corporation even though S…actually refers to the sub-chapter S of chapter one in the internal revenue code.…

S-Corporations enjoy all the advantages of C-corporations,…like limited liability, ease in raising capital and perpetual existence.…But S corps also enjoy two bonuses called pass-through taxation and…elimination of double taxation.…Let's take a look at these two advantages.…An S corp is not an independent tax paying entity, like a C-corp so all…the profits and loses are past through the shareholders personal income tax returns.…

However, the S-corporation must annually file IRS form 1120S to…report overall businesses, income, profits, and losses.…