04/07/2026
C vs. S Corporations: What’s the Difference?
When starting or growing a business, choosing the right tax structure is important. Two common options are C Corporations and S Corporations, and each has its own benefits depending on your goals.
A C Corporation is typically used by larger companies or businesses planning to raise outside investment. An LLC can choose to be taxed as a C Corporation. One key feature is double taxation, meaning the company pays taxes on its profits, and shareholders also pay taxes on any dividends they receive. However, C Corporations do not have self-employment tax issues, and they are often preferred by institutional investors. They also follow more formal rules and structure.
An S Corporation is usually better suited for smaller businesses. Like a C Corporation, an LLC can elect this tax status. S Corporations use pass-through taxation, meaning profits and losses go directly to the owners’ personal tax returns, avoiding federal corporate tax. However, there are restrictions on who can be a shareholder, and owners may still face self-employment tax considerations.
Both structures can play an important role in long-term planning. For example, businesses planning for an IPO often choose a C Corporation, while those focused on family ownership or smaller operations may benefit from an S Corporation or LLC structure.
There is no one-size-fits-all answer, because your choice depends on your business size, growth plans, and future goals.
Our firm can help you choose the right structure and plan for the future. Contact our office to get started.
