What’s the difference between a Corporation, an “S Corp” and an LLC?

C-Corporation: A Corporation is taxed once on it’s net profits (currently 21%) and again when those profits are given to the shareholder(s) as “dividends” – this is called “double taxation”. There are no US Citizenship requirements.

S-Corporation: An S-Corporation is the same “entity” type as C-Corporation with the same structure (Shareholders, Directors and Officers), the only difference is in how they are taxed by the Federal government.

Actually, a C-corporation gets S-Corporation status by filing a form with the IRS that allows it to not be taxed on the profits; instead the profits are added to the personal tax returns of the shareholder(s) and are taxed at the shareholder’s personal tax rate (instead of being double-taxed). The main restriction is that an S-Corporation shareholder(s) must be US citizens and a maximum of 100 shareholders.

LLCAn LLC is a different entity type than a Corporation – it does not have Shareholders, Directors and Officers but instead has what are simply called Members which is another name for “owners”. Members can be either a real person or a business entity and there are no US Citizenship requirements.

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