A C-corporation is the default business structure under IRS regulations, while an S-corporation has opted for a special tax status with certain advantages.
An S-corporation can only have one class of stock, meaning all shares have the same rights for liquidation and distribution. In contrast, a C-corporation can have multiple classes of common stock.
An S-corporation can only have one class of stock, meaning all shares have the same rights for liquidation and distribution. In contrast, a C-corporation can have multiple classes of common stock.
Corporation (C-Corp)
C-corporations, or C-corps, are separate taxable entities that file a corporate tax return and pay taxes at the corporate level. They may also face double taxation when income is distributed to owners as dividends, which are taxed as personal income.
Corporation (S-Corp)
An S-corporation is a corporation that passes its income, losses, deductions, and credits to its shareholders for federal tax purposes, allowing it to avoid double taxation on corporate income.