S Corporations pass on their business profits and losses on to the shareholders. In turn, the shareholders report the outcome on their individual tax returns. It keeps the corporation from paying double taxes on corporate income. However, there are certain criteria in order for your business to qualify as an S corporation. For instance, it has to be a domestic venture. You cannot have more than 100 shareholders. Plus, you must only have one class of stock. Of course, you will have to check with a lawyer to see if you qualify, and you must file the proper paperwork.