What is the difference between a C or an S Corporation?

What is the difference between a C or an S Corporation?

 

The difference between a C and S corporation simply revolves around the ways in which each will be taxed. A C corporation must follow corporate tax rates in paying taxes and filing tax returns. While an S Corporation also files tax returns, their taxes are paid at a personal rate as it by passes the owner and partners. C corporations can also be taxed at the corporate level but they fall victim to double taxation as shareholders pay personal taxes whenever the necessary profits are dispersed. S corporations do not have to worry about double taxation due to the singular level of taxation. In order to become an S corporation, shareholders must file Form 2553 with the IRS and meet a variety of necessary requirements. These requirements include: 100 shareholders or less, only one class of stock, domestic corporation, U.S. citizenship of all members, and permissible shareholders. If a corporation meets these requirements, they will obtain the rank of a taxable unit of business. In regards to the structure of these corporations, both employ shareholders, directors and officers to carry out necessary task and goals.

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