Knowledge Center

Corporation FAQ

What are the main differences between a C corporation and an S corporation?

C corporations are subject to double taxation; that is, one tax at the corporate level on the corporation's net income, and another tax to the shareholders when the profits are distributed. S corporations have only one level of taxation. All of their income is allocated to the shareholders.

However, C corporations have greater tax planning flexibility and can shield shareholders from direct tax liability. In addition, S corporations are subject to limitations, such as the number and type of shareholders they can have.

LegalZoom will help you start a C corporation or an S corporation. Get started by answering a few questions about your company, and we will file your paperwork with the Secretary of State.

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