What is the difference between “S” corporations and “C” corporations?
There is no difference between an “S” corporation and a “C” corporation, except the way they are taxed.(See the next questions and answers for more details.)
The term “S” corporation refers to an election the directors or shareholders can make about how the corporation will be treated for tax purposes. Otherwise, “S” corporations and “C” corporations are just corporations.
All corporations are treated as “C” corporations by default. To be treated as an “S” corporation, IRS Form 2553 must be properly and timely filed for the corporation.