You may be curious about the difference between a C-corp and a S-corp. Believe it or not they do have a lot of similarities although there are several things that set them apart. Both are corporations that have liability protection against responsibilities of financial downfalls of a business. They both have shareholders of stocks, they elect board of directors and officers to help run the business and oversee daily business tasks. They have meetings, pay annual fees and adopt by-laws to follow.
A C-corp can have unlimited shareholders of stock, while an S-corp is limited to no more than 100 shareholders, whom must all be in the United States. The shareholders have varying weight when voting in C-corps- for example people who have been with the company longer might have more voter authority than others, in an S-corp there is only a single type of shareholder. A C-corp can be owned by other corporations or LLC’s and S-Corps cannot.
One of the biggest differences between a C-corp and a S-corp is the way it is taxed. A C-corp faces double taxation; pay taxes at a corporate level and dividends on a personal level. An S-corp has pass through taxation, similar to an LLC. S-corps do not pay income tax. C-corps file tax for 1120 while S-corp file tax form 1120s. Speak to a lawyer, accountant or tax professional to help you decide which type of corporation is best suited for your taxation needs.