Corporations

Definition: Corporations are a type of business entity. They are groups of people who have organized themselves with the intent to provide goods and services with the goal of making a profit. Corporations, like other types of organizations, are subject to taxation. Corporations file their annual income tax return on Form 1120 (PDF). A small business may, if it chooses, decide to be a sub-chapter S corporation, or an "S-Corporation." An S-Corporation must report its annual income on Form 1120S (PDF), but is not taxed. Instead, its profits are taxed on the personal income tax returns (Form 1040) of the company's shareholders.