An "s corporation" or "s corp" is a corporation which has elected to receive "Subchapter S" status by the Internal Revenue Service ("IRS"). The "s corp" could be a corporation, partnership or limited liability company which has elected "s corp" status with the IRS. While the "s corp" is frequently discussed in legal terms, the "s corp" is essentially a tax classification. The primary component of the "s corp" is that any income or loss generated by the corporation will be distributed among the members of the "s corp" based upon the percentage of interest the member has in the "s corp." In other words, if the "s corp" receives a profit, that profit is not reportable as income of the "s corp." Rather, the profit will be reported by the members on their personal income tax returns, in accordance with the percentage of ownership that the members possess in the "s corp." Frequently, small businesses seek to establish "s corp" businesses in order to reduce their payroll taxes, because the profits are not subject to these taxes.