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Both C corporations and S corporations must file corporate tax returns to local, state, and federal authorities once a year. In general, any corporation other than an LLC is a C corporation. Other differences between C and S include:
C Corporations
-Owners or shareholders are taxed separately from the entity.
-Profits from the business are taxed at both corporate and personal levels, potentially subject to double taxation.
S Corporations
-May pass income, losses, credits, and deductions directly to shareholders.
-Usually associated with small businesses with 100 or fewer shareholders).
-Offers the tax-exempt privileges of a partnership.
Once a company is established as a C corporation, it can file an option to be taxed as an S corporation, which allows tax obligations to pass through to an owners’ personal tax reporting. Our team will offer advice as to how to file for your business.
Sharon M. Gum, CPA
405 Hartman Ln
Waterloo, IL 62298
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