C Corporations vs. S Corporations

C Corporations are separate legal entities that pay taxes on their profits, and shareholders are taxed again on dividends—this is called double taxation. S Corporations, however, pass income directly to shareholders, who report it on their personal tax returns, avoiding double taxation. While C Corps can have unlimited shareholders and more complex structures, S Corps are limited to 100 shareholders and must meet specific criteria. Both offer limited liability protection, but their tax treatment and ownership rules differ, influencing choices based on business size, goals, and tax planning.