What is the Difference between a C and S Corporation?

The Internal Revenue Service allows corporations to form under one of two different tax statuses. The first is known as a Subchapter C corporation, which includes the majority of big, publicly-held companies. This tax status requires a corporation to undergo double taxation when they pay dividends to shareholders.

Subchapter S corporations, on the other hand, are not subject to double taxation, but operate under stricter standards. In particular, an S corporation cannot achieve this tax status if it has foreign shareholders, originates outside the country, or is large enough to have more than 100 shareholders.

If you are trying to determine which formation option is right for you, a skilled and experienced legal advisor can help. Contact the Orange County business lawyers of Daily Aljian LLC, by calling 949-861-2524.