An S corporation pays no taxes on its net income. That net income flows through to the shareholders according to their percentage of ownership. Consequently, each shareholder pays taxes on the income via their own tax returns at their own rate.
A C corporation pays taxes on its net income. The money distributed to shareholders (dividends) are then taxed again on their own tax returns. Thus, you can get a double taxation effect on monies distributed to the shareholders--once at the corporate level and once at the personal level.
However, I believe that companies choose to become C corporations because S corporations are limited in the number of shareholders (35, I seem to recall) and all shareholders must be US citizens. Additionally, since the taxation occurs at the corporate level, individual shareholder's taxes are much more isolated from the effects of undistributed net income.
Comments
I'm not sure what you mean by "advanced".
An S corporation pays no taxes on its net income. That net income flows through to the shareholders according to their percentage of ownership. Consequently, each shareholder pays taxes on the income via their own tax returns at their own rate.
A C corporation pays taxes on its net income. The money distributed to shareholders (dividends) are then taxed again on their own tax returns. Thus, you can get a double taxation effect on monies distributed to the shareholders--once at the corporate level and once at the personal level.
However, I believe that companies choose to become C corporations because S corporations are limited in the number of shareholders (35, I seem to recall) and all shareholders must be US citizens. Additionally, since the taxation occurs at the corporate level, individual shareholder's taxes are much more isolated from the effects of undistributed net income.