Business Entity Types

C Corp vs S Corp: Key Tax Differences Every Business Owner Should Know

3:16Premium Video

Written byLipai WangFounder · IRS-registered tax professional

Key Takeaways

C corps: double taxation; S corps: pass-through taxation
S corps restricted to U.S. citizens/residents
Foreign owners should use LLCs instead
About half of U.S. corporations are S corps

C Corp vs S Corp

C corporations face double taxation (corporate tax + dividend tax). S corporations pass income through to shareholders, taxed only once. S corps are restricted to U.S. citizens/residents — foreign nationals cannot participate.

For Foreign Owners

S corporations are unavailable to foreign nationals. The practical choice is an LLC (most common) or a C corporation (for larger businesses needing corporate structure).

Frequently Asked Questions

Can a foreign national own an S corp?

No. S corporations are restricted to U.S. citizens and resident aliens.

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