A tax treatment under which a business is taxed using the Subchapter S laws and regulations of the internal revenue code. S Corp status is not the default taxation type of any type of business entity; it is only available to qualifying businesses  by affirmative election. One of the chief benefits of an S Corp election is that it allows corporations to avoid their default C Corp status and receive pass-through taxation rather than double taxation.

While corporations that desire pass-through taxation particularly benefit from the S Corp election, many LLCs will benefit from an S Corp election as well because, in some cases, an S Corp election will lead to lower self-employment taxes than the business’s default taxation type.