S Corporation

S Corporations are formed in the same manner that C Corporations are formed, and provide the same limited liability to shareholders. Corporations, whether C corporations or S corporations, are formed by filing articles of incorporation with the secretary of state. The main difference between the two corporate forms is that S corporations are "flow through" entities, that is, income is taxed at the individual level rather than at the corporate level.

S corporations are often a good choice for start-ups due to the limited liability, flow through tax treatment, and possible payroll tax advantages offered by them. S corporations are subject to several restrictions including the provisions that there be no more than 75 shareholders, other corporations cannot serve as shareholders, foreign citizens cannot be shareholders, and only one class of stock may be issued. If these restrictions do not interfere with business plans, an S corporation is often a good starting point for a start-up business. 

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