{"id":64,"date":"2023-05-30T19:47:49","date_gmt":"2023-05-31T03:47:49","guid":{"rendered":"https:\/\/mcquillanhohman.com\/?p=64"},"modified":"2023-10-12T12:49:12","modified_gmt":"2023-10-12T20:49:12","slug":"what-is-the-difference-between-a-c-corporation-and-a-s-corporation","status":"publish","type":"post","link":"https:\/\/mcquillanhohman.com\/business-formation\/what-is-the-difference-between-a-c-corporation-and-a-s-corporation\/","title":{"rendered":"What Is the Difference Between a \u201cC\u201d Corporation and an \u201cS\u201d Corporation?"},"content":{"rendered":"\n<p><strong>Do you need to know about the difference between a \u201cC\u201d corporation and a \u201cS\u201d corporation?<\/strong><\/p>\n\n\n\n<p>See also &#8211; <strong><em><a href=\"https:\/\/mcquillanhohman.com\/business-formation\/what-is-a-corporation\/\" data-type=\"post\" data-id=\"82\">\u201cWhat is a corporation?\u201d<\/a><\/em><\/strong><\/p>\n\n\n\n<p>Once you\u2019ve decided to form a corporation, your next decision is whether to elect as a <strong>\u201cC\u201d <\/strong>corporation or an<strong> \u201cS\u201d <\/strong>corporation.<\/p>\n\n\n\n<p>These two types of corporations get their names from the part of the Internal Revenue code they\u2019re taxed under.<\/p>\n\n\n\n<p><strong>C Corporations:<\/strong> (subchapter C of the internal revenue code)<\/p>\n\n\n\n<ul>\n<li>A C corporation is taxed as an entity at the corporate level.<\/li>\n\n\n\n<li>Additionally, each owner is taxed on gains at the individual level\n<ul>\n<li>This is referred to as \u201cdouble taxation\u201d since both the corporation and the individual shareholder are taxed.<\/li>\n\n\n\n<li>Double taxation is often seen as a disadvantage of C corporations.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n<p><strong>Advantages of C corporations<\/strong> include:<\/p>\n\n\n\n<ul>\n<li>no limit to the total number of shareholders a C Corporation can have<\/li>\n\n\n\n<li>no restrictions on who can own shares\n<ul>\n<li>including foreign entities.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n<p><strong>S Corporations: <\/strong>(subchapter S of the internal revenue code)<\/p>\n\n\n\n<ul>\n<li>S corporations don\u2019t pay corporate income tax\n<ul>\n<li>So they aren\u2019t subject to double taxation.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li>Instead, they operate as \u201cpass-through\u201d or \u201cflow through\u201d businesses.\n<ul>\n<li>business profits and losses pass through to individual owners who pay tax on this along with their other income.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n<p>Most businesses in the US operate as S Corporations because of this tax advantage.<\/p>\n\n\n\n<p><strong>Potential disadvantages of S corporations<\/strong> include:<\/p>\n\n\n\n<ul>\n<li>an S corporation can have no more than 100 shareholders<\/li>\n\n\n\n<li>owners must be United States citizens or permanent residents (with several exceptions)<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Which Type of Corporation Should You Choose?<\/strong><\/h3>\n\n\n\n<p>C corporations are more commonly used for higher income individuals while S corporations are typically used for smaller businesses.<\/p>\n\n\n\n<p>It\u2019s important to consider both the personal liability and tax implications involved when deciding whether a C-corporation or S-corporation is right for your business.<\/p>\n\n\n\n<p><strong>How to Decide:<\/strong><\/p>\n\n\n\n<p>If you need help deciding whether to form as a Sole Proprietor, S Corp, C Corp or LLC please <a href=\"https:\/\/mcquillanhohman.com\/contact-us\/\" data-type=\"page\" data-id=\"243\">get in touch<\/a>. We can help you make the right strategic decision.<\/p>\n\n\n\n<p>We specialize in the business laws of Alaska and Montana and are here to help with your business formation and compliance needs.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Do you need to know about the difference between a \u201cC\u201d corporation and a \u201cS\u201d corporation? See also &#8211; \u201cWhat is a corporation?\u201d Once you\u2019ve decided to form a corporation, your next decision is whether to elect as a \u201cC\u201d corporation or an \u201cS\u201d corporation. These two types of corporations get their names from the [&hellip;]<\/p>\n","protected":false},"author":5,"featured_media":150,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[26],"tags":[27],"jetpack_sharing_enabled":true,"jetpack_featured_media_url":"https:\/\/mcquillanhohman.com\/wp-content\/uploads\/2023\/06\/food-truck-diner.jpg","_links":{"self":[{"href":"https:\/\/mcquillanhohman.com\/wp-json\/wp\/v2\/posts\/64"}],"collection":[{"href":"https:\/\/mcquillanhohman.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mcquillanhohman.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mcquillanhohman.com\/wp-json\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/mcquillanhohman.com\/wp-json\/wp\/v2\/comments?post=64"}],"version-history":[{"count":28,"href":"https:\/\/mcquillanhohman.com\/wp-json\/wp\/v2\/posts\/64\/revisions"}],"predecessor-version":[{"id":758,"href":"https:\/\/mcquillanhohman.com\/wp-json\/wp\/v2\/posts\/64\/revisions\/758"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/mcquillanhohman.com\/wp-json\/wp\/v2\/media\/150"}],"wp:attachment":[{"href":"https:\/\/mcquillanhohman.com\/wp-json\/wp\/v2\/media?parent=64"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mcquillanhohman.com\/wp-json\/wp\/v2\/categories?post=64"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mcquillanhohman.com\/wp-json\/wp\/v2\/tags?post=64"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}