Differences Between S & C Business Corporation Types

S Corporation

• Better for smaller corporations
• 100 shareholders max
• Owners can only get common stock  (this comes with voting rights)
• You're not personally on the hook for business liabilities
• Taxed once—only shareholders pay on profits received
• Ongoing filings and fees to stay in compliance
• Less management flexibility; must have a board of directors
• More admin; strict rules about holding meetings and keeping records
• All shareholders must be U.S. citizens or residents

 

C Corporation

• Best if you plan to go public one day; can issue shares to founders, employees, and investors
• Unlimited owners (aka "shareholders") allowed
• Owners may get preferred stock (No voting rights but priority to dividends before common shareholders)
• Recognized internationally
• Preferred by investors

• You're not personally on the hook for business liabilities

   

• Taxed twice—business pays at the corporate level, and shareholders pay on income received

• Ongoing filings and fees to stay in compliance
• Less management flexibility; must have a board of directors
• More admin; strict rules about holding meetings and keeping records