California LLC Registration —
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A C-Corporation is a type of business entity that exists separately from its owners, who are called shareholders. This separation means the corporation itself is responsible for its debts and liabilities, so shareholders usually aren’t personally on the hook if the business runs into financial trouble or legal issues. This strong liability protection is one of the main reasons many people choose a C-Corp structure. However, one downside is something called double taxation. What this means is that the corporation pays taxes on its profits first. Then, when those profits are distributed to shareholders as dividends, the shareholders also have to pay taxes on that money on their personal tax returns. Essentially, the same income gets taxed twice — once at the corporate level and again at the individual level.

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On the other hand, an S-Corporation is still a corporation in the traditional sense, with shareholders, a board of directors, and all the formal requirements you’d expect. But what makes an S-Corp different is its special tax status. Unlike a C-Corp, an S-Corporation doesn’t pay income tax at the corporate level. Instead, the company’s income, losses, deductions, and credits “pass through” to the shareholders, who then report those amounts on their personal tax returns. This means the business income is only taxed once, making it a popular choice for small and medium-sized businesses who want to avoid double taxation.