Contrary to popular belief, the S corporation is not a distinct entity type. According to the Internal Revenue Service (IRS), an S corporation is a corporation that has elected treatment as a pass-through entity for federal income tax purposes under Subchapter S of the Internal Revenue Code.
As your small business expands and evolves, it may make sense to consider changing its structure. Many small businesses start out as sole proprietorships or partnerships, with only one or two owners and no employees. Over time, as your business grows and changes.