What is the difference between an S Corporation and a C Corporation?
Answer:
An s corp does not pay its own income taxes.
instead, an s corporation gets taxed (only once) like a partnership in that a proportionate share of income/loss from an s corp gets reported directly on the shareholders personal tax return.
in a c corp income only gets reported on a shareholders return if the corp distributes a dividend. hence a c corp pays taxes twice - first on its own earnings and then by it shareholders upon distributing a dividend.
If purpose is to defer income -a C corp is better
If purpose is to reduce personal liability but not increase taxes, an s corp is better
I think one has shares of stock and the other doesn't,
Good question. I am also looking forward for some answers.
Thanks
A C corp pays taxes. An S corp passes all profits and losses to it share holders and does not pay taxes. There is a limit on the number of shareholdres a S corp can have.
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