S Corporations vs. C Corporations
Corporations are a popular kind of business entity for several reasons. Their primary attraction is the protection from liability that they offer to business owners. When a corporation becomes the defendant in a lawsuit, its own assets are at stake, but not its owners’ private incomes or properties.
Corporations are further divided into two different kinds: S and C. These two kinds of business entity have a lot in common: they are both separate legal entities from their owners, and they both have shareholders who elect boards of directors. However, there are very important differences that any entrepreneur should consider when considering incorporation.
If you have any questions about what kind of business entity would best suit your plans, call the Austin business entity lawyers of Slater, Kennon & Jameson, LLP at 512-472-2431.
Primary Differences between S and C Corporations
Most of the differences between C and S corporations can be divided into two basic categories. Contact one of our experienced Austin corporate law attorneys if you have questions about the pros and cons regarding:
- Regulation. S corporations are the more strictly regulated of the two. For example, they can only be owned by US residents, cannot have more than 100 shareholders, and can only issue one class of stock.
- Taxation. The relaxed regulations can be an advantage of C corporations, but they also pose the risk of double taxation. C corporations pay taxes as separate entities, but their shareholders may also be taxed on their profits. In contract, S corporations are not taxed at the corporate level; only the shareholders’ gains or losses are taxed.
Choosing the best entity for your business plan is a key part of running a successful company. There are many complex factors to be considered while you make this decision.
Contact Us
The Austin business entity attorneys at Slater, Kennon & Jameson, LLP have the experience and legal knowledge required to answer your questions. Contact us at 512-472-2431.