What an S-Corporation Is and Is Not

This lesson defines an S-corporation as a federal tax classification, not a separate type of business entity formed with a state. Students learn how an S-corp differs from a C-corporation, partnership, LLC, and sole proprietorship, and why the distinction matters before filing paperwork.

The lesson focuses on the core concept: an eligible domestic corporation or eligible LLC may elect S-corp tax treatment so business income generally passes through to owners while owner-employees must still be paid wages for services. Later lessons will cover eligibility rules, Form 2553 timing, payroll setup, compliance calendars, and owner tax planning in greater detail.