Taxes paid on income of the business and not on business as an entity. No personal limited liability protection. You must pay twice the amount of Social Security and Medicare tax as you would as an employee. No life insurance deduction and only a partial health insurance deduction. All income is taxed proportionately to each of the partners who report it on their personal tax returns.
Shareholders have personal limited liability.
S Corporation may not have more than seventy-five shareholders. Shareholders and those owning 5 percent or more in stock have limited employee benefits. Shareholders have limited personal liability. Double taxation-the corporation pays taxes on its income and the shareholder pays taxes on dividends. Shareholders cannot deduct the losses of the corporation.