The S Corporation is a pass through entity. A C corporation can make an election to become an S corporation by filing form 2555 within 75 days of formation or by requesting a change of status with the IRS using this form. If the election is made after the initial time limit there is a delay before the S status takes affect. A pass through entity is not taxable. Taxes are passed along to the shareholders on schedule K-1 much like a partnership.
S corporations have some advantages, especially during startup years.
The Limited Liability Company has become popular in recent years as a simpler form of business. An LLC is a pass through entity as well and is ideal for holding real estate and other investment property. Corporations, Privacy, and Asset Protection are a very integral part of doing business in America today. You can keep the ownership of your business off the public record, and sleep a little easier knowing that all of your hard earned money and property is not exposed to an unexpected lawsuit. Tax Strategies for C Corporations are varied and complex.