C Corp vs S Corp — Key Differences and Benefits

Both C and S Corp provide key benefits to their owners/shareholders, including liability protection of personal assets.

Business operating as an S Corp
S Corp is considered a domestic corporation.
Its owners/shareholders must be U.S. citizens or legal residents.
S Corp can not have nonresident aliens as shareholders.

And there are types of businesses who can not choose to be S Corp.
That includes financial institutions and insurance companies.

S Corp is also a “pass-through-entity.”
That means corporate taxable revenues pass through to the personal tax returns of the corporation’s owners/shareholders.
No double taxation.

Another important considerent for S Corp is the salaries paid to owners/shareholders. Depending on how much is paid, the S Corp can get in trouble when IRS deems salaries paid as not “reasonable.”

Business operating as a C Corp
C Corp profits are taxed at corporate income tax rates.
And distributed dividends to shareholders are taxed as personal income.

The advantage of operating as a C Corp is that (if needed) you can own other companies (LLCs, partnerships, etc.).
And you can also have shareholders who are not U.S. citizens.
You can operate internationally, if/when necessary.

Again, both C and S Corp provide key benefits.
Choose the one that best serve your business operations.

Mariana Fieraru

Mariana Fieraru, an Eastern European transplant, fell in love with her new home shortly after landing in New York. She "discovered" pizza! Years later she still loves pizza. And so do her two feathered-kids, Sunny and Flipper

Mariana worked on both, the east and the west coast.
Big or small, each project she worked on helped define the importance of gaining and sustaining a competitive edge in an increasingly complex business environment.

Business know-how, love of teaching and writing – all combined in 2006 to form OBI.
Its mission: to make learning fun! And easy.

Through its training, consulting, and publications OBI builds bridges of knowledge to take you from where you are to
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