Even though both are corporations, both corporations have traits that differentiate their structure and way to conduct business. So, what is the difference between S-Corp vs C-Corp.
|To qualify as an S-Corp corporation must file form 2553Must meet stablished requirements.||When you file articles of incorporation, C-Corp is the default type of corporation.Easier to form & less paperwork|
|Pass-through tax( Income made by the corporation is not taxed and directly goes into income taxes of owner(s) )||Separates shareholders and company as different entityDouble taxation ( On profit made by the company & personal taxation on distribution or dividends made to shareholders)|
|Limited to 100 shareholdersAll shareholders must be American citizens.||No ownership limit Can be owned by other corporations.|
Each Corporation has its advantages and disadvantages when it comes to their Formation, Taxation and Ownership structure. However, they both fulfill their role depending in what type of company it is.
For a Small-Business looking to avoid double income taxation an S-Corp might be the best option.
For a Big-Company aspiring to be bigger, get more funding, more shareholders, etc., a C-Corp might be the best options.