An S corp (or S corporation) is a business structure that is permitted under the tax code to pass its taxable income, credits, deductions, and losses directly to its shareholders. That gives the S corp certain advantages over the more common C corp.

The S corp is available only to small businesses with 100 or fewer shareholders. It is an alternative to the limited liability company (LLC).

Both S corps and LLCs are known as pass-through entities because they pay no corporate taxes. Instead, they pay their shareholders, who become responsible for the taxes due.