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Latest revision as of 02:38, 9 October 2026


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The commonest form of legal entity is the corporation. There are two basic forms, C Corp and S Corp. A C Corp pays tax as per its profit for this year and then any dividends paid to shareholders is also taxed. Hence the term double-taxation. An S Corp however works differently. The S Corp pays no tax on profits. The net profit flows by way of the shareholders who then pay tax on that money. The big difference extra that the 15.3% self-employment tax does not apply.

So, by forming an S Corporation, your business saves $3,060 for the majority on real money of $20,000.

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