An S-Corporation is a tax election (not a business entity type) that allows corporate income to pass through to shareholders' personal tax returns, avoiding double taxation. To qualify, the company must have fewer than 100 shareholders, all of whom must be US citizens or permanent residents — foreign nationals on E-2, H-1B, or other nonimmigrant visas generally cannot be S-Corp shareholders. This limitation is important for international entrepreneurs. The S-Corp election is made by filing Form 2553 with the IRS.
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