![]() ![]() S corporations are pass-through business types, meaning they file IRS Form 1120S but pay no corporate taxes. If any corporate income is distributed as dividends, it's subject to double taxation. They have perpetual existence, which means the business exists even if the original owner dies.Ĭ corporations are taxed at the corporate level by filing IRS Form 1120.Both S corporations and C corporations must maintain the same formalities.Shareholders elect a board of directors that handles corporate affairs. Their structures are similar, with shareholders owning the company.They both have to file corporation formation documents with the state.Both offer shareholders some protection from liability.Similarities Between S and C Corporations You have up to 75 days after formation of a corporation to decide whether to become an S corporation. File IRS Form 2553 to elect S corporation status provided you meet all the eligibility guidelines. S corporations follow Subchapter S of the Internal Revenue Code. Typically, a shareholder is not personally liable for corporate debts, but in certain cases, a shareholder might be liable through "piercing the corporate veil." What Is an S Corporation? If a corporation fails to meet these requirements, the company can dissolve or lose personal liability protections.īecause a C corporation is a separate legal entity, corporate debts are only attached to company assets. Holding director and shareholder meetings.Then follow standard corporation requirements, such as: To form a corporation, file registration documents and Articles of Incorporation with your respective state. Corporations are typically not responsible for business debts or liability, except in very limited cases. The company makes distributions to shareholders according to how many shares each person owns. Officers on the board of directors are typically CEOs, CFOs, CTOs, and COOs. The board of directors has the majority control of business operations but shareholders can have some control over larger policy issues. Owners are called shareholders, and they elect directors to handle day-to-day business operations. In the United States, C corporations are the most common types of corporation. A C corporation (Inc.) is a standard corporation and the default business type when you incorporate. What Is a C Corporation?Ī corporation is what most people likely think of when they think about business organizations. ![]() Companies that do business in multiple states must register with the Secretary of State in each state. Requirements for forming a corporation vary by state, so check with your respective state's Secretary of State office. The company's status as a C or an S corporation depends on what it files with the IRS. Putting "Inc." after your company name indicates the business is incorporated in its home state. can mean the difference between S corporation and C corporation status. Similarities Between S and C CorporationsĤ. ![]()
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