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Corporations are separate tax entities that pay revenue tax on their profit. They can withhold employment taxes from their wages as they go, or they pay self-employment taxes – how only on the profits they obtain as wages. Earnings pass by the corporate to the shareholders, so they’re only taxed as soon. Only companies with fewer than 100 shareholders are eligible to be taxed as S corps. However, some companies, notably those in the finance sector, can n be S corps, no matter the measurement. Between single earnings taxation and wage-based, mostly employment/self-employment taxation, the S corp designation can result in actual tax savings. Like a C corporation, an S corp is an authorized entity. Enter the S corporation, obtainable only to smaller companies.