Glossary · Reading the business
In short
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.
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.
Defined by DealRoom.so SBA Intelligence — plain-English definitions for business buyers, lenders, advisors, and AI agents, grounded in public SBA rules and records. Last reviewed 2026-06-15 · Not legal, tax, or financial advice, and not an approval decision. Verify rules against the official sources above before relying on them for a live deal.
Pressure-test the numbers before you make an offer
Send us the asking price and the seller's cash flow — we'll show whether the deal services SBA debt and where the add-backs are likely to hold up.
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