{"ok":true,"canonical_url":"https://dealroom.so/glossary/s-corp","api_url":"https://dealroom.so/api/public/glossary/s-corp","data_freshness":{"sba_records_through":"2026-05-31","fdic_records_through":"2026-03-31","dealroom_last_updated":"2026-06-15","timezone":"America/Chicago"},"source_summary":["Public SBA 7(a) loan records","FDIC institution data","DealRoom lender and franchise enrichment"],"term":{"slug":"s-corp","term":"S-Corp","group":"Reading the business","definition":"This is a type of corporation that passes corporate income, losses, deductions, and credits directly to its shareholders for federal tax purposes, thereby avoiding double taxation.","what_it_means":"Many small businesses operate as S-Corps. When analyzing a seller's financial statements, understanding how S-Corp income was distributed to owners is critical for accurately calculating Seller's Discretionary Earnings (SDE) or EBITDA. After acquiring the business, you will choose your own entity structure, often an LLC taxed as an S-Corp, to manage your personal and business tax burden effectively.","url":"https://dealroom.so/glossary/s-corp","official_sources":[],"related":[{"slug":"c-corp","term":"C-Corp","url":"https://dealroom.so/glossary/c-corp"},{"slug":"llc","term":"LLC","url":"https://dealroom.so/glossary/llc"},{"slug":"ebitda","term":"EBITDA","url":"https://dealroom.so/glossary/ebitda"},{"slug":"sde","term":"SDE","url":"https://dealroom.so/glossary/sde"}],"related_questions":[{"question":"Are there any specific business entity structures (e.g., LLC, S-Corp) required for an SBA 7(a) loan?","url":"https://dealroom.so/sba-7a/questions/are-there-any-specific-business-entity-structures-e-g-llc-s-corp-required-for-an-sba-7-a-l"},{"question":"Can funds from a retirement account, like a 401(k), be used for my equity injection if rolled into a new C-corp via a ROBS plan?","url":"https://dealroom.so/sba-7a/questions/can-funds-from-a-retirement-account-like-a-401-k-be-used-for-my-equity-injection-if-rolled"},{"question":"How does a lender confirm an owner's U.S. citizenship if they were born in a U.S. territory or abroad to U.S. parents?","url":"https://dealroom.so/for-lenders/questions/how-does-a-lender-confirm-an-owner-s-u-s-citizenship-if-they-were-born-in-a-u-s-territory-"},{"question":"Can a foreign corporation own a minority (less than 20%) stake in an SBA 7(a) loan applicant business?","url":"https://dealroom.so/for-lenders/questions/can-a-foreign-corporation-own-a-minority-less-than-20-stake-in-an-sba-7-a-loan-applicant-b"},{"question":"Does my business need to be set up as an LLC or Corporation for an SBA 7(a) loan?","url":"https://dealroom.so/sba-loans/basics/does-my-business-need-to-be-set-up-as-an-llc-or-corporation-for-an-sba-7-a-loan"},{"question":"What is the SBA's requirement for a buyer's post-closing working capital position?","url":"https://dealroom.so/sba-7a/questions/what-is-the-sba-s-requirement-for-a-buyer-s-post-closing-working-capital-position"}]},"caveats":["Definitions represent DealRoom's plain-English interpretation for buyers; verify regulatory terms against the official SBA and eCFR sources listed.","Not legal, tax, or financial advice, and not an SBA eligibility determination."],"citation":{"label":"DealRoom.so Glossary — S-Corp","url":"https://dealroom.so/glossary/s-corp","source_type":"DealRoom Data"}}