What is the difference of personal liability between S Corp and C Corp
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What is the difference of personal liability between S Corp and C Corp
I am starting a private therapy practice part time in La
Habra, California. I have ruled out as establishing as a
sole proprietor as I would like to protect my personal
assets from any future lawsuits. I am wondering what would
be the better choice establishing as S Corp or C Corp
since in California I am unable to establish as a LLC.
What kind of impact would it have on my taxes?
Additionally what type of licenses would I need to obtain?
Asked on November 12, 2017 under Business Law, California
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 7 years ago | Contributor
There is no difference in liability protection between an S-Corp. and a C-Corp.: both are corporations, and both offer the same liability protection.
An S-corp. is a "disregarded" or "pass though entity": it is not taxed, but rather its profits or loses go to you (the owner's) income and are taxed only once, as your income, with any other income you have. A C-corp. has double taxation: any profits are taxed first at the corporate level (the corporation pays taxes), then, if and when the the owner takes money out (takes a distribution), those profits are taxed again as part of his or her income. Generally, a small business finds the S-corp. structure preferable.
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