Short Answer: An S corporation is not a legal entity—it is a federal tax election.
Why It Matters: Eligible LLCs and corporations may elect S corporation tax treatment if it is advantageous from a tax perspective. Whether that election is appropriate depends on your specific circumstances and should be discussed with your CPA or tax advisor.
Common Mistakes: Referring to an S corporation as a type of business entity; making the election without understanding the tax implications.
Michelle's BottomLine: Your legal structure and your tax classification are two separate decisions, and each should be considered carefully.
