1.17 : S 公司

An S corporation is a type of business entity that allows companies to enjoy the legal protections of a corporation while being taxed like a smaller partnership or sole proprietorship.

An S corporation offers its owners limited liability protection while maintaining corporate benefits.

This setup avoids double taxation like C corporations, where the company is taxed at the corporate level, and shareholders are also taxed on dividends.

Consider HealthVista Pharmaceuticals, a small pharmaceutical company classified as an S corporation.

If HealthVista makes a profit of three million dollars in a year, this profit is not subjected to corporate taxes.

Instead, it is allocated to the shareholders according to their percentage of ownership and taxed at their individual tax rates.

This way, the income is only taxed once at the shareholder level, which can lead to significant tax savings.

The S corporation status is ideal for small to medium businesses.

S corporations have a cap of a hundred shareholders and may find raising capital challenging due to their inability to issue various types of stock.