These are similar to C corporations but have important restrictions.

They cannot have more than 100 shareholders, and they must all be U.S. citizens or residents.  It can have only one class of stock, even though the shares may have different voting rights. 

S corporations offer pass-through taxation.  If corporate owners expect income losses for the foreseeable future, and they have jobs outside corporation, the pass-through taxation of an S corporation will allow them to offset their individual income earned.  Or perhaps corporate passive shareholders insist on dividend, but the active shareholders would rather keep putting profits back into the corporation.  In that case, an S corporation makes sense because the dividends can be distributed, and the corporation will not pay income tax on the passed-through profits.