If your company is an acquisition target, or will be, double tax can result if its assets are purchased. Employee benefits should also be considered. For example, the deductibility of health insurance for owner - employees is more flexible in a C corporation than in a partnership, LLC, or S corporation. Unreasonable compensation is also eliminated. One's salary can be capped and the balance of the corporate income distributed as a dividend without an additional tax to the shareholder.
S corporations impose restrictions on ownership.
Ownership is limited to 35 shareholders and they can only be individuals or certain types of trusts. Foreign persons and corporations cannot own stock in an S corporation. In past years, shareholders could convert from a C to an S corporation in anticipation of realizing large gains on the sale of assets or the sale of the business itself. If you're operating as a C corporation and wish to elect S status, the election must be made no later than two and a half months after the beginning of the year to be effective. For calendar year businesses, this date is March 15.