What is the difference between an S Corp, a C Corp and an LLC?
First, it is important to differentiate among legal entity types and tax elections, as this concept is often confused. Corporations and LLCs are legal entities that are authorized and governed by state statutes. The S Corp and C Corp names are used to describe different income tax elections, and this status does not impact the actual legal structure of the entity. So legally, there is no difference between an S Corp and a C corp – both are references to an ordinary corporation formed under state law. The difference lies in the tax treatment of the entity and its owners. When a business person forms a corporation, the owners must make an election as to how they wish to be taxed for income tax purposes. S corps are generally taxed only at the shareholder level, while C corps are taxed at the entity and shareholder levels. There are many other differences in the taxation of these two classifications, and one is not necessarily better than the other for all businesses, so again it is advis
