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How S-Corporation differs from C-Corporation?

 
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Category : > S Corporation
Posted On : Thu Aug 27th,2009

 
One of the first things that those forming an S Corporation find most appealing is that those with S Corporation status are not required to pay both corporate and individual income taxes. However it is only fair to note that because the shareholders are not subject to double taxation, they may end up paying a higher personal income tax rate.
 

One of the first things that those forming an S Corporation find most appealing is that those with S Corporation status are not required to pay both corporate and individual income taxes. However it is only fair to note that because the shareholders are not subject to double taxation, they may end up paying a higher personal income tax rate. When total taxes are considered over the course of the year, both on the corporate and on the individual level, those belonging to an S Corporation almost always end up paying fewer income taxes.

Employment tax rules are also favorable under an S Corporation versus a C Corporation. In Corporations such as the S Corporation where shareholder-employees are in smaller numbers, it is possible for all of the corporation's profits to be extracted in the form of a salary that is paid. This means that the corporation can pay out its profits in the form of wage increases or bonuses at the end of the year, making the taxable amount for income zero. When income is zero there is no need to pay income taxes. Employee-shareholder wages are subject to employee taxes but payments taken out of profit and distributed to shareholders are not subject to employment taxes.  
    


 

 

  


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Comments (7)
Collingwood   wrote on : Tue May 04th,2010
Do shareholders have to take a salary in an S corp? Can they just take distributions? How about an LLC?
Reply : infotaxsquare.com
 

Yes, In S-Corporation you are required to withdraw reasonable salary. In LLC answer is "no" members are not required to withdraw salaries.



Alec Stewart   wrote on : Tue May 04th,2010
One partner of s-corp wants to retire their shares of privately held stock; the other partner wants to place a value on it to buy back. What are the tax implications?
Reply : infotaxsquare.com
 

Gain or loss will be determined based on the basis of that specific partner



angie   wrote on : Tue Jul 20th,2010
my pastor wants to make our ministry/church a corporation and become a non-profit organization. Which corporation would be best in this case s or c corporation?
Reply : infotaxsquare.com
 
Dear Angie:

Thanks for choosing InfotaxSquare.com for your business needs. You have to form a non-profit organization. You can either use the following link to apply for or can call us for free consultation at 516.822.3100.

https://www.infotaxsquare.com/forms/nonprofit-init.php


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derek   wrote on : Tue Mar 01st,2011
i am starting a small business that will be run out of my home. Can my wife and I form an s corporation?
Reply : infotaxsquare.com
 
Dear Derek,

Thanks for choosing InfoTaxSquare.com for your business needs. Yes, you and your wife can form an S-corporation if you both are either US Citizens or Residents. If you want to retain us to register your S-Corporation please either call us at +1 (866)754 4460 or use the following link to apply for.

https://www.infotaxsquare.com/processor/order-init.php?o=co


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Ernesto Arreguin   wrote on : Fri Jul 12th,2013
I currently have a c corp and would like to change to an s corp, I just opened a bank account in the business name, is there a simple "cross over" or is it involved? and what is involved in swithcing? I really like the advantages of an s corp, originally that's what I wanted to file under but didn't know there was an s and c corp.
Reply : infotaxsquare.com
 
Dear Ernesto Arreguin:

Thank you so much to choose InfoTaxSquare.com for your business needs.You can either use the following link to convert your regulater corporation to an S-Corporation or call us at 1+516.822.3100 to place your order over the phone.

http://infotaxsquare.com/forms/s_corp_election.php


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Thomas McClurg   wrote on : Thu Jun 25th,2015
the company I currently work for has offered us a chance to become a distributorship and I need to know which is better a C or S corporation. I plan on having only myself and an assistant manager, with 6 employees, ( which I am going to make subcontractors), also another 70 subcontractors to deliver the papers.
Reply : infotaxsquare.com
 


Better a C or S Corporation

Thomas McClurg:

Thanks for choosing InfoTaxSquare.com for your business needs. You can please read the following articles to decide which entity structure is better for your business or you can also call us at 516.822.3100 to discuss in person.

https://www.infotaxsquare.com/view_article.php?title=C-Corporation%20VS%20S-Corporation%20VS%20LLC|InfoTaxSquare.com%20%20%20&id=8

You can also use the following links to see, what our customers say about our professionalism and customer service.

Testimonials:

http://goo.gl/BnNqSd

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http://goo.gl/pnnhXL


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Janene   wrote on : Thu Mar 30th,2017
I am publishing my second Christian book and putting the proceeds into the 501 c3 non profit ministry account. They are asking me to choose between a C corporation or an S corporation. Which should I choose?
Reply : infotaxsquare.com
 
A nonprofit corporation is created for a good cause and not for doing business. C or an S Corporation structure is selected for the profit corporations, not for Non Profit organizations.

 


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