{ January 17th, 2007 }
The Theory Behind Subchapter S
Subchapter S status was enacted so that startup companies and other entrepreneurs would not shy away from choosing a corporate form of organization because of the potential for double taxation. A corporation that elects Subchapter S status is treated for federal income tax purposes as a partnership, but maintaining the corporate advantage of limited liability for its shareholders. Thus, corporations that elect Subchapter S status are known as ”S corporations” while all other corporations are called ”C corporations.”
About the Author
Ryan Roberts is a startup lawyer and represents technology companies through all phases of the startup process, including incorporation, seed & venture financings, and exit transactions. Click here to learn more about his practice.
