Q: Someone told me that having an S corp has many advantages as well as disadvantages. Can you explain to me exactly what this type of corporation entails and if it is beneficial?
- Peggy Stiles
A: An S Corporation is a small corporation that elects to be taxed under Subchapter S of the Internal Revenue Code, which gives an electing corporation some, but not all, of the tax benefits of a partnership. An LLC can also make this election, enabling it to take advantage of the payroll tax savings discussed below. But before we get into the pros and cons, here is a brief history of the Subchapter S Corp.