How does an S-Corporation differ from a traditional C-Corporation?
The difference is quite simple; there is no such thing as an S-Corporation. The Secretary of State has no legal entity called an S-Corporation as it is a term created by industry professionals to refer to an IRS filing called a Sub-Chapter S. An “S-Corporation” is quite simply a C-Corporation in which at the end of the year you file the corporate taxes using the 2553 form (Sub-Chapter S) instead of the traditional 8832 form (corporate tax structure). Either way, the entity is still a C-Corporation and is subject to the same rules and regulations of operation as normal. See our “Education” page for further details.
An S-Corporation is similar in structure to a C-Corporation, however it is not subject to double taxation. The profits of an S-Corporation is taxed at the individual level, whereas the C-Corporation is taxed at the corporation, as well as the individual level. A C-Corporation is formed when you file the Articles of Incorporation with the Secretary of State. An S-Corporation is created when you elect to create one with the IRS.
