What is the difference between an "S Corporation" and a "C Corporation"?

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Catherine Le Nevez
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You wonder what is the difference between a "company S" and a "company C"? one of the many types of economic and business systems in the world today, so read our guide carefully.

What is the difference between an "S Corporation" and a "C Corporation"?

Corporation C

Type C companies are the most common in the United States, in most cases this system focuses mainly on a few key points. First, entrepreneurs will set up a "separate" legal system, in which more people have responsibility .



The main purpose of this is to protect the owners' property from any legal inconvenience that may arise in the future.

  • Shareholders: the shareholders are individuals who own shares in a particular company. It could be said that they are a partner who provides capital and those people who own multiple shares in a company can make decisions in relation to it, clearly they are individuals who know the advantages and disadvantages of investing in the shares of a company.
  • Administrators: there are different types of directors in companies, in any case each of them is responsible for the decisions in relation to the directions that the company will have to take. In the United States it is common for there to be directors for various branches of the company, but to fully understand the work of each it is necessary to know the differences between a 'CEO' and a 'chairman of the board and how are you doing? the labors are set.
  • Officials I officers often belong to a company's board of directors and are hired by business owners to perform various administrative duties.
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Permanent existence

One of the most interesting advantages of typical companies is that they have an extended stay system after the death of the owner of the company . This means that the company can continue to operate even after losing its founder.

Credibility

The fact that it is the most common type of company in the United States is also linked to credibility. A company operating under the Type C society model it tends to have greater credibility among investors and the general public.

Unlimited growth capacity

Another significant feature of this type of company is that its growth capacity is unlimited. In other words, with good management, there are no limits to the profits that a Type C company can produce.

S Corporation

Like any other company, S companies have similarities to C companies. In each case, S company is characterized by the inclusion of "Limited Liability Protection" , that is, it is based on the LLC system, this brings significant advantages when paying your own taxes of companies.

Either way, setting up a company S involves many things, and you need to know the importance of accounting information in making decisions, among other factors. Even so, below, we'll introduce you to some of the basics.

Lump sum payment

Establishing a company S will require the payment of a fixed fee, of usually around $ 150. This in turn is accompanied by some paperwork that will specifically depend on the state or region of the nation you are in.


Registration Agent

You will need to use the services of a registry agent , who will be responsible for providing a legal address. This is done for the purpose of preparing the company for any legal matter. This address will provide customer service during business hours.


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Differences between "S corporation" and "C corporation"

The main difference we find between S companies and C companies is that S tend to have higher tax advantages .

This is because taxes go directly to shareholder returns. This means that shareholders have to pay taxes on a monthly basis, in any case the shareholders will receive dividends. Even so, in S companies, shareholders usually have some employee legal responsibilities in the first year.

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