what is the difference between an s corp and a c corporation c corp 
c corps pay corporate taxes on their earnings the way individuals pay income taxes in the u s corporations are currently taxed at a flat rate of 21 25 any dividends or other profits are then distributed to shareholders with after tax funds s corps by contrast are generally exempt from federal tax on most earnings so they can distribute more gains to stockholders in return for this tax benefit s corps face certain irs mandated restrictions the bottom lines corps are a common type of legal entity recommended for small businesses they carry the tax advantages of partnerships while providing the limited liability protections of corporations sort of a corporate lite structure they are easy to establish and simpler to maintain than regular c corporations s corps require many of the protocols and incur many of the costs associated with regular corporations starting with the fees and formalities associated with incorporation they are definitely more expensive to establish and time consuming to maintain than llcs another popular small business structure though advantageous for fast growing firms they are also subject to certain restrictions on their size and shareholders by the irs which could eventually inhibit their expansion the good news is that it s relatively easy for an s corp to change to c corp status should business conditions prove favorable to do so 