Small Business
C Corp
North Carolina
C corp vs. S corp: Which is better?
I am currently starting a new business and am trying to decide which corporate structure is best for my particular situation. I have heard that C corps and S corps have different advantages and disadvantages, so I am looking to get legal advice as to which would be more beneficial for me. I understand that there are many factors to consider, such as taxation, liability, and potential for growth, so I am hoping to get a better understanding of the pros and cons of each structure and which would be the most suitable for my needs.
Answers from 1 Lawyer
Answer
Small Business
North Carolina
Nicholas M.
ContractsCounsel verified
It would be impossible to give you a primer on all of the advantages and disadvantages, but here is a headnote version: C-Corp Pros: Ultimate flexibility with regards to ownership, control, power, etc through the issuance of one or more classes of shares. Cons: Double taxed. You will be taxes as a corporation and as an individual taking a salary from the corporation. S-Corp (this is just a C-Corp electing to be taxed under subchapter S of the IRS code): Pros: Tax advantage for owners (up to 100 people) from not double taxing. Cons: Less flexibility than C-Corp but more granular control than LLC. Depending on the situation, most companies starting out are better off starting an LLC, which has less formalities, and then converting to a S-Corp or C-Corp once they scale and can take advantage. C-Corp, S-Corp, and LLC all have the same level of liability protection if you follow the formalities for formation and maintenance. C-Corps have the most rigor and LLCs have the least. You can also consider LLP and other business structures based on co-owners or other factors that a lawyer can help you evaluate.
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