Corporations, or C corps, must pay income taxes on profits when they’re made
Corporations, or C corps, must pay income taxes on profits when they’re made when they’re divvied out to shareholders, a process called double taxation. They are also more costly to set up and require more extensive record keeping and reporting than LLCs. However, they offer the strongest personal liability protection and make it easier to raise capital through stocks. They also offer more flexibility than a limited liability company in that new shareholders can be added or removed without reformation . An S corp is a type of corporation that allows profits to pass through to an owner’s personal income, meaning they aren’t subject to double taxation like a C corp. State laws differ on how this structure is taxed, with some states taxing profits above a state-specified limit. Some states tax an S corp as a corporation, offering little benefits for this structure. There are eligibility requirements that must be met for your business to qualify as an S corp. It’s b...