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Choosing Between an S-Corporation and a C-Corporation

Advantages of S-corporations:
	For corporations that are owned by US residents or US citizens, an S-corporation provides its shareholders with a significant advantage: avoidance of double taxation, all of its income is ‘passed through’ and taxed on the shareholder level.
	Compared to C-corporations, S-corporations have more flexibility on deducting operating losses from the shareholder’s other income.
Disadvantages of S-corporations:
	The Internal Revenue Service (IRS) enforces several limitations to S-corporations, including direct tax liability. As such, C-corporations are more flexible on their tax planning.
	Flexibility of fringe benefit plans. Shareholders of S-Corporations owing more than a threshold (i.e. 2%) are taxed on various benefits (i.e. medical insurance premiums) while shareholders of C-corporations do not pay such taxes.
	An S-corporation is limited to a maximum of 75 shareholders.
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