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Home Resources M&A Glossary S Corporation

M&A Glossary

S Corporation

Short for “Subchapter S Corporation”. A state-incorporated business that elects special tax treatment.

See Also

C Corporation, entity.

Tips

An S Corporation does not pay income taxes. Instead, its owners pay income taxes on their proportion of the corporation’s profits allocated to them on their K-1 tax form (IRS Form 1065) for each fiscal year. S Corporation earnings are taxed only one time because earnings pass through to the investors.

Related M&A Terms

Sales Tax

A tax collected on the sale of goods or services. Tips If the owner of a business is required to have a sales tax permit, then sales tax is charged...

SBA 7(a) Loan

A loan offered through the Small Business Administration. See Also Small Business Administration. Tips The SBA 7(a) loan typically requires a 10% to 20% down payment, and the balance is...

Scalable

The ability to quickly grow a company without requiring a proportional additional investment in the business to support the growth. Example Most software and tech businesses, such as Uber and...

Secured Party

An individual or entity to whom a debtor has made a promise to pay under the terms of a promissory note and security agreement. Related Resources Small Business Acquisition Financing...

Security Agreement

An agreement that gives the lender (i.e., seller) a security interest in the assets of the business when the seller is financing a portion of the sale. See Also Promissory...

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