Understanding the difference between a C Corporation (C-Corp) and an S Corporation (S-Corp) is key when deciding how to structure your business in the U.S. Here’s a clear side-by-side comparison:

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🔍 C-Corp vs. S-Corp: Key Differences

Feature	C Corporation (C-Corp)	S Corporation (S-Corp)
Taxation	Double taxation: Corporation pays taxes on profits, then shareholders pay tax again on dividends.	Pass-through taxation: Profits/losses flow to shareholders’ personal tax returns. No corporate-level tax.
Ownership Restrictions	Unlimited shareholders, any nationality or entity type	Max 100 shareholders, U.S. citizens or residents only
Stock Classes	Can issue multiple classes of stock (common, preferred)	Only one class of stock allowed
Investors	Preferred by VCs and institutional investors	Not ideal for raising venture capital
Fringe Benefits	Deductible for owners/employees (health insurance, etc.)	May be taxable to shareholders owning >2% of the company
Entity Type	Default type when you incorporate	Requires IRS election via Form 2553 after incorporation
Corporate Structure	Directors, officers, shareholders required	Same structure as C-Corp
Tax Year	Can use any fiscal year	Must generally use calendar year

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🏢 When to Choose Each

✅ Choose a C-Corp if:

• You plan to raise venture capital

• Want to offer stock options or go public

• You don’t mind double taxation or can offset it

• You're operating outside the U.S.

✅ Choose an S-Corp if:

• You want pass-through taxation

• You have a small business with U.S. owners

• You don’t plan to raise venture capital

• You can comply with the shareholder and stock class restrictions

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📄 How to Elect S-Corp Status

1. Form a corporation (or LLC)

2. File IRS Form 2553 within 75 days of incorporation or by March 15 of the tax year

3. Wait for IRS approval of S-Corp status

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Let me know if you want help deciding based on your specific business goals or if you'd like a tax-saving example.