S-Corporation (S-Corp)
An S-Corporation (S-Corp) is a special type of corporation created through an IRS tax election. S-corps are designed to avoid double taxation on the corporate income. The corporation’s income, losses, deductions, and credits pass through to shareholders, who report this flow-through of income and losses on their tax returns.
File Articles of Incorporation:
Submit the required incorporation documents to the state’s Secretary of State. This step officially creates the corporation as a legal entity.
Create Bylaws:
Draft and adopt bylaws that outline the corporation’s operating rules and governance structure. These bylaws guide the internal management of the corporation.
Issue Stock Certificates:
Distribute stock certificates to the initial shareholders. This formalizes ownership and specifies the shares each shareholder holds.
Obtain EIN:
Apply for an Employer Identification Number (EIN) from the IRS. The EIN is used for tax reporting and other business-related purposes.
Elect S-Corp Status with IRS:
File Form 2553 with the IRS to elect S-Corp status. This election allows the corporation to be taxed as a pass-through entity, avoiding double taxation.
Comply with State Requirements:
Follow any additional state-specific requirements, such as filing initial reports and paying necessary fees. This ensures the corporation remains in good standing with the state.
C-Corporation (C-Corp)
A C-Corporation (C-Corp) is a legal structure for a corporation in which the owners, or shareholders, are taxed separately from the entity. C-Corps are subject to corporate income tax and provide the benefits of limited liability, perpetual existence, and easier access to capital.

File Articles of Incorporation:
Submit the required documents to the state’s Secretary of State. This step officially establishes the corporation as a legal entity.
Create Bylaws:
Draft and adopt bylaws to outline the corporation’s governance and operating procedures. Bylaws set the rules for how the corporation will be run.
Hold Organizational Meeting:
Conduct an initial meeting to adopt bylaws, elect officers, and issue stock to the initial shareholders. This meeting formalizes the corporation’s organizational structure.
Issue Stock:
Provide stock certificates to the initial shareholders. Issuing stock formalizes ownership and specifies the shares each shareholder holds.
Obtain EIN:
Apply for an Employer Identification Number (EIN) from the IRS. The EIN is necessary for tax reporting and employment-related activities.
Register for Taxes:
Register for state and local taxes as required. This step ensures compliance with all relevant tax authorities.
Comply with State-Specific Regulations:
Follow any additional state-specific requirements, such as filing initial reports and paying necessary fees. Compliance with these regulations is essential to maintain the corporation’s legal standing.
Business types at a glance
How it protects you | LLC | Corporation | Nonprofit | Sole prop |
---|---|---|---|---|
Limited liability protection This ensures you or other partners aren’t personally on the hook for company debts and liabilities. | – | |||
How it’s managed and maintained | ||||
Flexible management structure Corporations require a board of directors, annual meetings, record keeping, and more. LLCs and sole proprietorships have rules too—but they’re less strict. | – | – | ||
State compliance requirements After you form, there are annual requirements to keep your business in good standing. | – | |||
How it’s taxed | ||||
Taxed LLCs and corporations have multiple tax options. | – | |||
Tax exempt Nonprofits with 501(c)(3) status are exempt from federal income taxes. | – | – | Only with 501(c)(3) status | – |
How it can grow | ||||
Flexibility to raise capital Get access to funds from banks, venture capital firms, and foundations. | – | |||
Able to IPO Only corporations can sell shares on the stock market. | – | C corp only | – | – |