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A C-corporation is a tax term referring to one of two ways a corporation can be taxed.

Tax Terminology

The terms “C-corp” and “S-corp” have meaning in the tax world.

For legal purposes, there’s no such thing as a C-corp or an S-corp. For legal purposes, there’s just a “corporation.”

The “C” and “S” refer to subchapters¬†of the Internal Revenue Code that cover corporate taxation.

C-corporations are taxed under Subchapter C, while S-corporations are taxed under Subchapter S.


When a corporation is formed it is taxed as a C-corporation by default, but it can elect to be taxed as an S-corporation.

LLCs are not corporations (the “C” stands for “company”) but they can elect to be taxed as either a C-corp or as an S-corp.

Differences Between C- and S-

The differences between C-corps and S-corps are difficult to get into in these glossary entries, which are intended to be basic overviews. But here’s a sampling of the differences:

  • S-corporations share many of the same characteristics as partnerships. S-corporations themselves do not pay income tax. Instead, the end result of S-corp operations pass through to the shareholders, who are taxed on their share of corporate profit.
  • C-corporations exist as completely separate entities from the shareholders. The end result of corporate operations stay within the corporation, and the corporation pays income tax itself.

“This blog post, along with comments that may follow, should not be considered tax advice. Before you make final tax or financial decisions, please secure a professional tax advisor to give you advice about your unique situation. To secure Jason as your accountant, please click on the ‘Services’ link at the top of the page.”