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Key Differences Between S-Corps and C-Corps

Choosing the right business structure is very important, so it is essential to talk with a Philadelphia corporate law attorney about what type of business is right for you. Many people who are starting a company for the first time or who are expanding a company will end up deciding that they wish to incorporate a business. Incorporation can make a lot of sense due to the myriad benefits associated with the corporate form. However, if you decide to incorporate, you have one more important decision to make. You will need to decide whether you wish to form an S-corporation or whether you wish to form a C-corporation. 

Curley & Rothman, LLC can provide you with assistance in determining which type of corporation makes sense in your situation. Our legal team can also offer you advice on the key differences between S-corps and C-corps and can help you to complete the required paperwork under Pennsylvania law for officially incorporating your business as one of these two types of corporations.

To find out more about how a Philadelphia corporate law attorney can assist you in understanding the key differences between S-corps and C-corps, give us a call at 610-834-8819 or contact us today.

What are the Key Differences Between S-Corps and C-Corps?

There are many important differences between C-corps and S-corps. Some of the key differences include:

  • You must elect to operate as an S-corp. Once you have incorporated, you must file an S-corp election with the IRS if you want to be treated as a Subchapter S corporation instead of a C-corporation. S-corp actually gets its name from the chapter of the Internal Revenue Code which sets S-corp rules. To elect to operate as an S-Corp, you must file IRS Form 2553.
  • There are restrictions on who can own an S-corp. Individuals, certain trusts and estates are the only permissible owners of S-corps. Corporations, partnerships, and non-resident aliens cannot own shares of an S-corp. There are no such restrictions on C-corps.
  • Only one class of stock can be issued to S-corp shareholders. There can be different classes of stock for C-corp shareholders.
  • There are restrictions on the number of shareholders in an S-corp. You can only have up to 100 shareholders.
  • S-corps and C-corps are taxed differently. Profits and losses are passed through to S-corp owners and declared on personal returns. C-corps pay corporate taxes, which creates the risk of double taxation when shareholders also have to pay taxes on gains and dividends.

A Philadelphia corporate law attorney can discuss what these differences can mean for your organization and can provide you with insight into other differences that can impact your choice of business entity. Contact Curley & Rothman, LLC for help today.

What Business Structure is Right for You?

As you consider the key differences between C-corps and S-corps, you will need to think about what your hopes are for your company and will need to consider which criteria are the most important to you.

While both C-corps and S-corps can allow you protection from liability, the other advantages provided by each corporate structure can differ. For example, if you plan to run a small family company and tax flexibility is your primary goal, an S-corp may be a better solution. If, on the other hand, you hope to grow your organization very large and want different types of owners to be able to have an ownership stake, then a C-corp may be a better bet under the circumstances.

Curley & Rothman, LLC can discuss your current business situation as well as your future plans and can provide you with insight into whether you should form an S-corp or a C-corp. By getting legal advice from an experienced corporate law lawyer who knows all of the ins-and-outs of how the law treats different business entities, you can make certain that you have made the right choice for your company.

Getting Help from A Philadelphia Corporate Law Attorney

Curley & Rothman, LLC provides help to startups and growing companies in and around Philadelphia and surrounding areas. We assist with many of the important decisions that you are going to have to make as a business owner, including the choice of how your organization should be structured.

We can explain the differences between C-corps and S-corps, can help you to choose what kind of corporation makes sense under your circumstances and can assist you in filing necessary corporate forms. Give us a call at 610-834-8819 or contact us to speak with a Philadelphia corporate law attorney to find out more about how we can help.

Business LawScott Rothman