| If you have incorporated your business and decide to | | | | and the corporation itself. In a C Corporation, |
| become an S Corporation, you should know the main | | | | shareholders report income from the corporation on |
| difference between S and C is the corporation's tax | | | | their 1040 form. |
| structure. | | | | The S Corporation still must file a federal tax return, |
| Once you incorporate your business, you will have to | | | | but the corporation itself does not pay taxes. |
| decide within about two and a half months whether | | | | Once a C Corporation is formed, the corporation itself |
| you want to remain a C Corporation or file a form | | | | is unchanged, but the way it is taxed does---at least in |
| 2553 with the IRS to become an S Corporation. | | | | most states. Some states do require S and C |
| In an S Corporation, the shareholders are taxed like a | | | | corporations to file taxes the same way, so you must |
| partnership or sole proprietorship. In other words, an S | | | | know your state law when determining whether to |
| Corporation avoids the "double taxation" of C | | | | choose an S corporation for your company status. |
| Corporations in which taxes are paid by shareholders | | | | |