C corp and S corp are two types of corporations, which are different in many respects.
One of the main differences between C corp and S corp is in the taxation. In C corp, the taxes are paid as separate entity. Though the C Corp has to pay the taxes on the profit that it gets, there is no need for the shareholders to pay tax for the profits of the corporation. The shareholders have to pay taxes only for the amount that they get from the corporation. If the corporation passes its after-tax profit to the shareholders, then they are bound to include it in their returns. This taxation is often called as double taxation, which is not seen with S Corp.
An S corp has to file only a K-1 informational tax return. The S Corp does not pay the taxes but the shareholder has to include the profit that they get from the S Corp in their tax returns.
In terms of capital accumulation, it effectively takes place in C Corp than in S corp. The C Corp has manifold stock classes whereas the S Corp only has a limited class.
When regarding the flexibility, the C Corp is better and that is why large companies prefer it.
It can also be seen that the C Corp have a choice in ending their fiscal year. On the contrary, the S Corp has a fixed fiscal end; it should end by December 31.
A corporation originally formed exists as C corp. But the C Corp can be converted to S Corp after getting consent of the shareholders and also by making changes in the tax payments.
Summary
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